On Renting, Part 1: Our History
Posted on January 28, 2008 by Him and tagged finances, housing
I should have seen this coming: after Friday's post about how we got an amazing deal to rent our place for a few more years, we inevitably received the obligatory "renterz drool, homeowners rule!" comment. I apologize, personal finance blogosphere, for not letting you know the nuances of our housing decision!
Buying property isn't something that we've been ignoring. Heck, I've posted numerous times about owning property. As you can imagine, it isn't as simple as going to the fictional neighborhood condo supermarket, picking one out, and viola! - move into a new place.
When Her and I first moved to Chicago three years ago, there was no way we were in any financial shape to own property. Every month we had about 30 different bills we were paying a month with over $20,000 of credit card debt alone, coupled with a lot of student loan debt. During that first year, the only way we would be able to afford a place would be if we took out a 100% loan, probably with some "creative" financing. I'm willing to bet that we would be in deep financial trouble had we bought a place then.
Two years ago, Her and I were starting to gain momentum in terms of getting our finances together. We still had over $18,000 in credit card debt and a lot of student loans. Again, looking at our overall financial situation, we were not ready to buy property without accepting a lot of risk.
One year ago, we were well on our way to becoming somewhat financially healthy. Looking at our finances, we were in a better position to buy property. We were aware, though, that we would be buying at a time when home prices were at, or at least near, their maximum. Prices for a 2 bedroom, 1 or 2 bathroom condo near public transportation in Chicago were still out of a comfortable price range.
Today, we're in the best position to purchase property. Home prices and interest rates are dropping. Even if we weren't earmarking much of our cash for our wedding, we still wouldn't buy. The reason: In 2 years we're probably going to move away from Chicago.
Tomorrow, I have a post lined up that explains what moving in 2 years does to our purchasing property outlook.
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Benjamin Bach | Jan 28, 2008
Hey Him
Great post - You are what we in the industry call 'an educated renter', as opposed to the people who bash owning real estate (I'm thinking of a certain San Fran based PF blogger)
BenjaminBach.com
I think it is admirable of you to not purchase a place when you knew you could not afford it. If more people thought like you, we wouldn't have the poor housing situation like we have today.
bravo. i'm glad you are posting a follow-up to that comment stream. i'm in the same (what i'm now calling) "educated renter" boat.
Livingalmostlarge | Jan 28, 2008
I wouldn't buy if you are going to move. The costs alone are expensive. Stupid to buy at that point.
MVP | Jan 28, 2008
Maybe you guys could take that time to really attack that nasty school loan debt. Then, when you move, you'll be in an even better position to buy in your new location. Just a thought.
christine | Jan 29, 2008
I totally agree with you! We are in the same position as you - we rented because we couldn't afford to buy and had too much debt. Now that we're more comfortable with our money situation, we aren't staying in the city long enough to benefit from buying.
Even after explaining all of that, we still get a lot of the, "But why aren't you buying?!" questions.
GT | Jan 28, 2008
My husband and I are in the military and have come to much the same conclusion as you ... we never know how long we will be in one place, except for the fact that it won't be more than a year. From the numbers we have crunched, it won't make sense for us to buy a house until we can stay in it for at least two years ... and who knows when that will be?
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