The Rise of Renting in the U.S

My wife and I are early 30s. I spent my 20s in the rat race, working 60-80 hour weeks for material possesions (nice vehicle, luxury townhouse, etc). At some point, I got tired of it and said, "Can we try something different?"

I switched to a fully remote job. We disposed of the townhouse (no equity in it). We downsized our lives (1 car! I ride a bicycle everywhere! You would not imaging how much better shape I'm in) and began to live more frugally with a short-term plan of moving onto a sailboat and living on the ocean for a few years. We save 50%+ of my income (we live in a low cost of living area), we should be able to retire comfortably around age 45. We'll be moving onto our sailboat in the next few months, learning to sail together, and then starting a long circumnavigation around the world (~5 years).

My wife didn't require any convincing. More quality time together for getting rid of things we shouldn't have cared about in the first place? It was an easy sell. If anything, she sold me.

Rule 1: Pick the right partner.

One thing I've found is that even if the people you knew before aren't available to make the transition, there are plenty people on the other side that will know you for who and what you are to them. Taking a stand and fighting for your change and growth takes some guts, and people find that admirable. Dating has also never been better because you both immediately enter into these relationships without pretense.

We sold the big expensive house and moved into a 25' Airstream almost 4 years ago. I felt like I wasn't getting ahead. A bit stuck. I know she did as well. A bit different from the grandparent we still work a normal 40 hour week with normal (remote) jobs but have kind of checked out of the normal american dream.

http://i.imgur.com/FQfQIlu.jpg That little dot in the middle is where we are spending this week. Middle of the Mojave Desert about 10 miles from any human.

It's a competitive world we live in, and I often feel like I'm wasting every minute that I'm not actively working towards learning something new/planning my next cool experience/my next job opportunity. I wonder when I'll have the time to settle down and raise a family. Hopefully we can let some of the hot air out of housing market to make starting a stable, nuclear family somewhat tenable again in the near future.

It can make you financially stable, cover for your health expenses, give you decent retirement, put your kids through school and give them a decent shot at life.

From when was all this a bad thing?

>> Both of us orient ourselves towards experiences over possessions.

God forbid only a health interruption, a major market crash or any other unforeseen financial difficulty can leave you far worse off compared to your peers.

Not to mention, compared to your very own parents you don't want to be homeless when you are old.

One of these things is not like the others.

I shower every morning at my local 24 hour super sport gym. I'm a sucker for hygiene.

I don't really worry about my van being broken into because I think I tend to stay in low crime neighborhoods. I'm also not really attached to any material possessions contained within. Things come and go, no need to worry about them while they're here.

I'm writing a tongue-in-cheek book about the van life experience tentatively called "Tech Bubble Burst: A survival guide to living in and out of your van." It's been a blast of experience so far. :)

It's my impression that it gets harder and harder to create a place called home for the average person, as wages go down, available jobs are more competitively sought after (especially the ones where you feel like a human doing humane things from day to day), and real estate & rent around urban centers goes up.

Count your blessings if your field of work is amenable to being done remotely, and start building out the skills, habits, and resources needed that go along with it asap.

But short of living in a true "tiny home" (< 400 sq ft), many people today (myself included) are "right-sizing": choosing to live in smaller than average spaces and using smarter space utilization, usually in order to reap some other benefit, whether that is proximity to amenities, work, and transit systems, lowering utility costs, etc.

It probably helps that having a huge house is weakening (though clearly not gone) as a symbol of social status, especially in crowded coastal urban areas.

Good luck out there!

The middle class, if defined as households making between $35,000 and $100,000 a year, shrank in the final decades of the 20th century. For a welcome reason, though: More Americans moved up into what might be considered the upper middle class or the affluent. Since 2000, the middle class has been shrinking for a decidedly more alarming reason: Incomes have fallen.

'67-'99 there weren't stagnant wages as much as post 2000, where we have seen a sideways market, massive recession, 15+ years in horrible economic conditions worsen for lower and middle. Costs rising way faster than wage increases eventually crushes the lower/middle.

The CNN article also mentions money locked up in the upper class and so does an associated video [1]. The lower/middle spend in downturns, the rich do not. Eventually demand is depressed and noone can buy anything. It is bad for lower/middle and upper when noone is gaining in income and has no consumer power gains to grow on. People buy less, people sell less when consumer power is locked up.

For decades, the middle class had been the core of the country. A healthy middle class kept America strong, experts and politicians said. But more recently, these residents have struggled under stagnating wages and soaring costs.

[1] https://www.youtube.com/watch?v=oeCfq-9l_b8 (around :30)

As long as property taxes do not outstrip my interest rate, that ratio should stay in my favor going forward.

To be precise, property tax increases the liability of holding a house as an investment relative to other investments, so higher property taxes make capital that was invested in real estate move to other sectors. That means that fewer properties are owned by speculators, so more are owner-occupied. This is why California has one of the lowest homeownership rates in the country (alongside New York and Nevada, which are much more urbanized than Cali):

http://www.census.gov/housing/hvs/data/rates.html

(Homeowners don't like to believe this, because the economic reality is basically that investors can buy whatever they want and the middle class picks up the scraps; that's sort of undignified, but true, so people should get used to it)

Housing is unaffordable primarily due to parochial land-use restrictions, as Matt Yglesias explains in The Rent Is Too Damn High (http://www.amazon.com/TheRent-Too-Damn-High-Matters-ebook/dp...) and I explain here: http://jakeseliger.com/2015/09/24/do-millennials-have-a-futu....

If we want cheaper housing, all we have to do is legalizing the building of it.

1. As interest rates approach zero, asset prices approach infinity (via "Discounted Cash Flow" valuation). The wealthy own most assets.

2. The wealthy tend to have a lot of debt (by choice). Low rates make this cheaper to deal with, and cheaper to obtain for speculation, lifestyle upgrades, etc. Point 1 above provides lots of equity to borrow against.

This is the "wealth effect” which the Federal Reserve and other central banks have been deliberately pursuing. They thought reflating assets would make people feel better and spend more. Unfortunately the wealthy don't need ten haircuts a month or twenty meals a day.

It also turns out that when normal people see houses becoming more expensive, they decide to save more. So the net effect has been negative.

All very predictable but central banking is pre-scientific.

Nope. When first time buyers go to the bank to get approved for a loan it goes like this:

1) Look at your income and expenses

2) Figure out what monthly payment you can afford

3) Work backward from #2 and the interest rate to determine how much you can borrow.

From there every player (agents, sellers, bank) all want you to spend the full amount from #3 on your house. Since there is real crap at the bottom of the market, every $10k gets you a notable improvement. 2nd time buyers also fall for this, and it doesn't matter if you're smarter (like I was) and don't spend the full amount. Enough people let their loan approval amount influence them that the following holds:

Your monthly payment is mostly based on your income. It's the price of housing that varies (inversely) with interest rates.

By lowering rates over 30 years, they stimulated the economy until 2006-7. Then they jacked up the rates which initially lowered housing prices, which put people in trouble while also slowing the economy a bit and it all fell apart. They subsequently lowered rates and did QE1-3 to get things moving while also reinflating the housing bubble. They now have to raise rates ever so slowly to avoid part II, but they must raise them in order to restore the ability to regulate inflation with them.

https://en.wikipedia.org/wiki/Federal_funds_rate#/media/File...

This article estimates that eliminating the mortgage interest deduction would reduce home prices by ~12%. But if you're in the highest tax bracket, the tax benefit from deducting mortgage interest is around a 28% reduction in your effective payment. So at least at first, you'd lose more to the elimination of the deduction than you would gain in reduced payments.

Of course it would be purely for the benefit of your day to day life as you wouldn't get anything back out of it (if and when you decide to move).

To each his own.

See eg http://economix.blogs.nytimes.com/2013/09/03/taxing-homeowne...

If you are renting you are prioritizing the location rather than the house. You can't find a house with your ideal gym, but you can't change your city to New York city.

The way I see it: If you don't plan to live in that place for the next 15-20 years, then you shouldn't buy. You can always invest your money in more liquid assets.

Your scenario assumes a location (or person) with:

  - Desirable housing in the $60-100K+ range
  - Employment sufficient to generate high paying positions
  - The will to sock away a large part of your income for close to a decade, just to have a paid-off home (which is not a big enough benefits to be a means unto its own)

More info and examples here: (and elsewhere)

http://www.interest.com/refinance/news/3-free-ways-to-pay-yo...

My nephew said within a week or so they're flooded with responses, They work out the paperwork with the landlord and they're on to the next place.

A mortgage, on the other hand, is only secured by the property. The buyer is the owner, period; pulling up my house in the county property records shows my name. This is why banks must go through the courts in a foreclosure process in order to take ownership of the property, and cannot simply repossess it.

This explains why many struggling families can "get" "reverse mortgages" in which they sell their earned equity back to the bank that has always owned the majority share. Until they have sold all their shares, and are evicted, that is.

When you buy a house (err, rent from a bank), your monthly "rent" is now fixed for the next 30 years, and will never go up (unless your property tax goes up, this is subject to local laws). Your principle and interest are fixed for that whole time, so your mortgage payment is stable.

That's the big advantage with buying.

Just because many homeowners do not stick around one home long enough to get the benefits does not mean that it is inherently a bad idea.

What is the hedge here against falling home prices? In other words, if you purchase a home a reasonable price of $500k, but changes outside of your control cause the market for that house to fall such that you could only sell it for $400k, how is your net worth not affected?

Maybe rational buyers have been priced out of the market?

If one stops to ponder what would make an individual want to rate their landlord on a "RateMyLandlord" kind of site, then the answer is pretty simple: hatred. The biggest reason for people to write such a review is to complain. Usually, the complaints people write stem from issues related to their inability / lack of desire to pay their rent on time.

Landlords hate not getting paid. Especially in major cities, where regulations basically annihilate their ability to operate in an honest and competitive way without significant impact on their financials. Getting their monthly rent on time is really the only way they can turn any kind of profit on their business.

My income is higher than it has to be for the place I rent here in Brooklyn. But I get charged far below market rents. Why? Because I pay my rent every month on time without hassle. Because I don't wreck my apartment, don't need many repairs, and don't bother my neighbors. So even though I could afford to pay the market rate, I am a 'good' tenant, so I pay the so-called "preferential" rent, which is almost $400 per month cheaper than the rent cap instituted by NYC's horrid rent control laws.

That's right. My landlord could actually charge me more, but he doesn't, because I'm not a shithead. What am I supposed to write in my RateMyLandlord review? That I am a good tenant and get charged lower rent than everyone else? There goes all of my reward for being a decent person.

I don't see any way for such a site to work without damaging reputations or ruining nice arrangements tenants already have with their landlords.

In fact, interaction with the "landlord" is rare, and often the apartment is owned by a company, not an individual.