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More on the rent-vs-buy brawl

So I wake up this morning and see this: another bit on the merits of renting rather than buying.

It's no surprise that New York and San Francisco were most prominently featured. What I found more interesting was the writer's assertion -- backed by a study done by the New York Times -- that the much-vaunted tax benefits of homeownership aren't as colossal as everyone seems to think.

I'm grateful to see the other side of the debate. For so long renting has been considered the bastard step-cousin of owning; merely a step on the ladder, a means, not a end.

But on a personal note, renting has allowed me to live the kind of life I've always sought. Renting has meant I could travel and teach overseas, making a pittance without the worry of keeping up a home mortgage. It's meant I haven't been locked down to a day job. It's not for everyone, but it's a choice that's ever more worthy of investigation.

Rental fever

Ah, synchronicity.

My cohort and I were just talking about something of this nature today.

The thrust of the article: Why pay to own property when, for what often amounts to less than half the price, you can rent? Many will argue the value of homeownership, the tax benefits, the achievement of the American Dream.

But these days, renters are getting more property choices and what often amounts to lower monthly payments than homeowners. More freedom and more money -- sounds like the American Dream that's always been promoted to me.

Flipping: Profitable but risky business

Sounds like buying and then quickly turning around houses, or flipping, could be a little less lucrative than it's been in the past. That doesn't mean people aren't still doing it -- there's plenty of speculators in Arizona, Nevada, parts of Texas, and elsewhere who are going into communities, buying homes, and then turning them around for sale in a month or even less time.

One wonders if this'll happen in New Orleans -- a place ripe for speculation in post-hurricane times.

Vultures or just good businesspeople?

You be the judge.

Empathy

Hurricane Katrina and her follow-up sister, Rita, are huge real estate issues.

That's because real estate isn't simply about transaction, negotiation, and land. It's where we live, where we lie, where we love. And for the people along the Gulf Coast, it's something that's being stripped from them even as you read this.

Our hearts and hands go out to them.

Welcome, we're renter-friendly

My old stomping grounds is reporting that Ann Arbor, Mich., and Charleston, S.C., are among the most "renter-friendly" cities in the nation. The article cites an online survey at ApartmentRatings.com that, among other findings, pinpoints several college towns as renter-friendly. These include Athens, Ga.; Davis, Calif; as well as Ann Arbor, home of the mega-huge University of Michigan.

No surprise that only one California city made the list. Still, I don't know that there'll be a mass exodus of lease-signers to College Station any time soon ... but I've been wrong before.

High rise buildings in San Jose

Kudos to the San Jose city planners (from every trip down there, I never thought they existed!) for pushing high rise apartments and mixed use buildings. Having high rises downtown brings people back to the cities, and helps the economics of good things like public transit and downtown grocery stores. These people could probably survive mostly or fully without a car. Caltrain (and maybe BART, if the extension ever gets off the ground!) provides a leisurely ride into SF, and SJ itself has some sort of nightlife, from what I hear.

A little thinking like this could get people into downtown Oakland. It is already BART friendly, with three stops nearby, bus service is decent, and there is a Smart and Final, not to mention a bunch of Chinese markets a stones throw away.

And the rates keep rising

Looks like Greenspan's given the go-ahead, despite fears from some that Katrina might've driven in part of the U.S. economy.

But according to research I've done, most people have already locked in a second mortgage at the previous lower rates, so really it's not these would-be refi'ers who are getting affected.

Instead, it's those seeking loans for other purposes, such as home equity or debt consolidation, who might take these heightened rates into account.

Closing credits

The curtain's fallen for another single-screen theater.

Good neighbor?

In my hometown, cheers went up with the new Wal-Mart on Midland Road. A welcoming ceremony was held. My brother, then 18, went to work for the cause of Sam Walton. We found a new place to hang out at 3 am.

That was a little more than a decade ago. Since then, communities have both celebrated and cried out against the advent of Wal-Mart. But it looks like some members of my current home are excited about the mega-chain's latest addition to this neck of the woods.

Commercial real estate is an odd animal. I wrote about it for GlobeSt.com back in the days of the boom, covering both San Francisco and the Silicon Valley. What a madhouse -- vacancy rates in the low single digits, would-be tenants pulling every trick in every book to get in. We all knew the bottom would fall out, but it turned out to be sooner rather than when we'd hoped.

Wal-Mart doesn't have one singular affect. When I lived in the rural Midwest, the store was a city hub and social gathering point. One Saturday afternoon I stumbled across a square-dancing event by the checkout registers.

I'm not naive. This was not the goal. The goal was to make bucks, and it's often at the expense of the workers, who receive minimal paychecks with little to no benefits. And the real-estate landscape is often at risk, with smaller businesses closing as a result. But in the case of Oakland's Hegenberger Road, a freeway-adjacent area which hardly started out looking like Main Street U.S.A., it looks like Wal-Mart is, indeed, a welcome neighbor.

Just a bit of Technorati

No need to panic.

Technorati Profile

One bubble feeds the next?

Call it bubble, call it souffle, call it balloon, call it what you will.

This graph amused me most: "Excessive home prices divert human capital as well. The National Association of Realtors had 1.1 million members at the end of 2004, up from 766,560 in 2000. It's hard to believe that such an increase would have occurred if there had been no housing bubble."

Could be correct, but the focus may be slightly off. Fact is, as the tech explosion reached full fizzle, ex-employees leaked out into new professions. Real estate, an industry that's often (incorrectly) seen as a sure-fire moneymaker, inherited lots of these former dot-bombers as they tried to recover and recoup.

May have had less to do with an oddball housing market than with the death and dearth of Pets.com.

Interest-Only, continued

I agree with Allison, most people getting into the interest-only loans are simply borrowing over their heads. The feeling of the housing market is eerily similar to the feeling of the NASDAQ in 2000. The internet brought stock picking to the masses in new and powerful ways, but it lead to millions making unwise investments that will take years to recover from. Now, consumers have powerful tools that allow people to invest in the housing market when they previously had been unable to, starting with 100%+ loans, and continuing up to the folly that is interest-only loans. Yet, the feeling is that there is no risk in this, the market will go up up and away forever, and that somehow it is different now.

But, in other news, the Dow is still above 10,000 and this guy still has a job that undoubtedly pays more than mine.

Interest-only and other affairs

I've been watching with interest -- if you will -- the rise of this breed of mortgage.

Frankly, I'm pretty convinced that this means a lot of people will lose their homes in 10 years, or earlier if that's when their loan balloons up from interest to an actual payment. This Bankrate article gives a few cautionary warnings, but gets right to the heart of the matter when it says that interest-only allows people to buy more house than they can afford.

People are going to do it, though, particularly in this era of pushing into the horrific housing market before it gets even bloodier. I recently attended a focus group where nearly all of the 12 people in the room said they wanted to buy within the next year because it was a good investment, and seemed to think that taking out an interest-only loan was worth the risk. When asked about the downsides of interest-only, they blanked.

It's cause for caution.

In other news, the New York Times says why use Realtors? Could be a good read for market-savvy sellers.

And the U.S. Department of Justice has apparently filed suit against NAR, targeting an MLS policy that apparently no longer exists. The most interesting bit of info I've turned up on this so far is that the DOJ is the recipient of an Inman Innovator Award. Brings back memories of my time in their Emeryville shop ... and how Brad had wanted a female wrestler by the name of The Poontangler to take the stage at Connect.

Oh my. Memories.

Tenancies in common

Last month, this article caught my eye. Essentially, laws regarding tenancies in common (TICs) may soon loosen.

Right now, a tenancy in common means that all partners are equally responsible for the entire mortgage. If one pulls out, the rest need to pick up the slack.

With the proposed changes, partners would only be responsible for their own share of the mortgage. This could make TICs the way to enter overheated markets such as San Francisco and New York. There's probably some downside to this, but I haven't yet figured it out.

Adam's the best!

For getting this to work, I promise never to harp on him about anything ever again, make him pesto and tilapia whenever he wants, and to forgive him for overwriting my web page.

And I thought it was only a title!

I've been playing two-timer.

Switching from Blogger to Yahoo! Small Business and then back again, I've been trying to marry the two happily. Maybe the Internet just isn't a big enough bed for all of us.

Come on, kids. We can work this out.