Is Home Ownership a Good Thing?

Apartment developers always buy the least capital cost structural and HVAC/appliances,and pass the energy inefficiencies that result onto the renters. The result is grossly ungreen living spaces.

Without adequate new incentives for developers and landlords to upgrade to energy star and beyond,, for example, a shift to appartment living will worsen our carbon footprint.

We need to upgrade zoning codes to achieve this.

Home ownership seems to be more about investment than having a place to live. The expectation is that you buy, sell, buy bigger, sell, etc, and make a profit along the way. Doesn't this create a market of rising prices that excludes people of modest means that just want a place to live? We owned a house for 9 years, gladly sold, and have sworn never to buy one again. Love the flexibility of apartment living.

Speaking as someone who is about to close on a home purchase in less than two weeks, I can say that owning a home means a lot to me. Mainly because it will be my space, and I can do what I want to it (mainly invest in green living, which I can't do in my apartment). The house was built in 1926, and needs to be modernized to green standards (at least in my opinion). Granted, the house is located in the Lehigh Valley of Pennsylvania, once home to Bethlehem Steel, and the area is now just starting to recover, so I can't really speak about living in a hard hit area.

Owning this home also gives me an incentive to re-invest in my community by supporting local businesses, buying locally grown food and supporting local initiatives for more green architecture. I'm going to care a lot more about where my tax dollars are going to be spent now that I actually pay them (apartment dwellers don't have to pay taxes and so are less likely to see or care where they go).

One can make an argument either way, but being a homeowner makes me more part of the local community, and I want the local businesses to thrive. So I think I'll stay put for a while.

Awesome point, JL! The only reason my husband and I purchased our current home is because our landlord that we were renting from decided to cash out and sell to us. Even though we got a "good deal," we've had to spend so much money fixing up the home's energy inefficiencies that it really hasn't been worth it. More stringent zoning codes would have really helped.

The point of the carbon footprint is valid, but this is more of an economical point than a green one. In my area, it is definitely cheaper to own than to rent (assuming you have the capital for the down payment). Renting is essentially money down the drain and at the end of the lease, you're left with nothing. If you own, you at least get money when you sell/move. I guess the big question is whether it's worth it to go through the hassle (and possible improbibility due to economy) of selling a house for the money, or to throw money down the drain but have huge flexibility in location.

If you own your home, you have a vested interest in maintaining it. Not to denigrate all renters, but some of them give renters a bad name because they don't care about their neighbors and trash the place.

JL: completely agree on the inefficient appliances, poor isolation etc. that plague apartment buildings. But still, the apartment buildings share common infrastructure and benefit of economies of scale in terms of heating, plumbing, etc.

I bet someone somewhere calculated the energy consumption of 10 stand alone "green" houses each with its own heating and plumbing vs. a standard apartment building.

Every winter my poorly insulated apartment was twice as cheap to heat as the best designed house that is open to the cold from all sides.

JL:

I want to agree with you but I can't, entirely.

For new buildings developers should be held to the highest standard. For existing buildings, and in particular older ones, they should be held to the highest standard the building is capable of supporting.

I live in a 14 floor appartment building, relatively small by comparison, and we have a shared laundry room.

Even though the machines are old, we have 6 machines (3 wash, 3 dryers) for 70 apartments, instead of 70 washers and 70 dryers.

Furthermore, each apartment has a 100w service, no more. Apparently they can't upgrade the service anymore because the wires are too old and pulling the wires would require a lot of work (banging out walls etc...) so everyone just has to make do.

If you plug in too much, you'll blow a fuse. No one in my building has a dishwasher, no one has a large fridge or stove. If I turn all my lights on and then my computer, the lights dim (and stay dim). To me, the landlors lack of upgrades is almost greener than upgrading. Make sense?

How about a difference between urban and rural renting? Usually rural renters live in stand alone structures that have the same drawbacks as an owned house with the problems that JL already listed. I'd say, urban living, rent; rural living, own; suburban living, move.

The problem isn't homeownership, it's sprawl, apathy and greed.

Sprawl is driven by ignorant consumers who absolutely MUST have a media room for their 9 billion DVDs they never watch and a 300 sq. ft. terrace for the parties they never throw.

Apathy keeps many homeowners from giving much thought to the next generation of people on earth. We (I'm a condo-owner myself) make choices that harm the planet and unlike renters, we do have choices.

Greedy developers have been getting rich by creating unsustainable suburban living to apathetic sprawlers.

One solution is to develop affordable sustainable condos in cities, but no developers seem interested (even though they could still make a lot of money through lower construction costs and tax incentives.

There are three big advantages to home ownership:

1) Relative security and control over your fate (even if you pay your rent, your landlord might boot you; when you own, that takes "eminent domain" and is very rare).
2) It forces people to save. People that are allergic to budgets and responsible spending will still pay their mortgage, and thus have something when they retire.
3) For Americans, the tax code makes it a great tax shelter.

That said -- a declining market poofs all three: declining value kills your savings, outweighs your tax benefit, and if you want to move, can trap you with a negative mortgage. And without the economic incentives, you're left with little more than the nesting instinct.....but that has to be balanced with the various studies that show renters often report a higher quality of life, as the lack of maintenance frees up their time for socializing and rest. So it's a bit of a wash.

So I'm renting this year. I will buy when the market stabilizes.

And Christian -- old overloaded wires are a fire hazard. They're a fact of life for us renters, but please be sure you have batteries in your alarms, access to a fire escape, and good renters insurance.

I say that, yes, owner occupancy is generally a good thing:

* you have a stake in the community, and therefore care more about what goes on in your neighbourhood, which (as mentioned above) is good for society;

* it inhibits housing bubbles (like the one whose aftermath we are now experiencing) by keeping prices down--there will be fewer properties available for private landlords to buy up as investments (thus driving up prices), something which I believe should be restricted by regulators and policy-makers.

Owning your own home gives you the flexibility to be as green as you want to be. You can have a garden, or start a biodiesel lab in your garage, or put up solar panels, or even just use a clothes line. (Unless you have an HOA.) You can choose your own appliances, and make sure the lights are turned off. If you have enough property, you can even just go in the back yard to appreciate nature.

Apartment building owners tend not to use the greenest stuff around, unless that's a selling point. Besides, someone has to own the property, right? And if you're stuck in an apartment building and want to go see some trees and feel grass under your feet, do you need to hop on a bus or drive your car to the nearest park? Hopefully you're using your bikes instead!

Rob Walsall made an interesting point about the housing bubble. When my wife and son and I were looking to get out of our much-too-small downtown apartment, several condos were going up nearby (to be precise, in the Vista in Columbia, SC). All of them were ridiculously overpriced. Apparently, corporations were buying them so their big-wigs would have a luxurious place to stay when in town and, of course, for the investment. We would have loved one, but were not about to pay three to four hundred bucks a square foot. We ended up with a ranch house not far from downtown, but we really miss being able to walk to the State House, restaurants, art galleries, etc.

renting does not necessarily mean aprtment buildings in cities. and owning does not necessarily mean McMansions in the suburbs. I rent a stand-alone house. I've always rented and never lived in an apartment building. And I do know people who own homes, condos, and apartments in downtown cities. It's rare, but it is possible.

so let's not stereotype. this is purely an economic stability/flexibility thing.

I think the main argument for home ownership is not an environmental one (although I definitely agree that landlords, particularly apartment owners will nearly always use the least efficient option because it's cheapest) but financial security in retirement. I've bought a home this year which will be paid off by the time I'm in my mid-fifties. At that point, I will only be responsible for the electricity & gas bills & property tax. Those who are renting now & plan to continue will still be paying market rent, which will likely be rather difficult if they plan to stop working before they drop dead.

In our city we have both parks and trees.

Home ownership is a like many things: good and bad. Living spaces are so different it is difficult to broadly paint houses as bad, condos as good, etc.

I own a duplex which was my first house. Now it is a rental, and I maintain it with as much eco-sense as is feasible. I built a new house, a very green new house in a vibrant downtown, and I love it. It is great to have the opportunity compared to former rental days to make all of my decisions to go as green as possible on my own properties.

Property ownership also allows financial freedom if done wisely. Most people don't understand that residential real estate is a long term investment vehicle and not a liquid asset that can be sold at any time. If done right, you can own a house in less than 15 years while typically experiencing growth in value and tax sheltering. This is a very green thing, because it gives people the ability to provide their own version of green to their own housing, and may help them afford many of the green products that cost a bit more, eco cars, clothes, food, etc. are not typically as cheap as there basement price alternatives.

As someone who recently moved to be closer to her job, I am sure my carbon footprint went down. Had we owned a home, we wouldn't have sold it, but our apartment lease gave us the flexibility to move out and move to a smaller place that is closer to work -- now, instead of a 60 minute round-trip commute, I am under 5 minutes from work.

Also, there is a common assumption that money paid on a mortage is money saved somehow... but, especially on newer mortages, most of it goes to interest and very little to principle. Also, the assumption that your home MUST increase in value has driven the recent housing bubble... and many people aren't getting their money back after the burst -- and really, should they? I don't see how it is sustainable to assume that you'll get your money back -- because, in essence, you'd then be living for free. That increases home prices etc. The only affordable homes become the newest ones way out in the exhurbs... thus urban sprawl.

I also agree about energy efficiency. If that is your concern, look for apartments with shared HVAC -- the landlord has a huge incentive to keep that efficient and to design buildings with appropriate insulation. Our new bulding has heat and AC included, we have a large shared system and it works very well. My electric costs are about $35-40 US per month -- not bad for 1,000 square feet.

It really boils down to how you live. Paying a mortgage is cheaper than renting. Apartments are huge heat sinks but houses give you the luxury of planting trees for shade and adding upgrades like awnings or more modern furnaces and water heaters.

Sprawl is often the result of cozy relationships with developers and the government officials they bribe. Here in town a protected wetlands is being destroyed for a housing development but a new wetlands will be developed at taxpayer expense somewhere that's currently less desirable for the developers. The politicians like the sprawl for the added tax revenue. The actual demand for housing really doesn't matter since there is already a glut of unoccupied housing. Much of the housing is built on old farmland so the developers get tax subsidies from the federal government for simply building there. So even unoccupied housing pulls in a profit.

30 years of apartment living:

Year 1 rent + renter's insurance per month: $1150
Year 30: $ 2556
Total outlay: $ 52,793

30 years of home living:

Year 1 mortgage + homeowner's insurance per month: $1500
Year 30: $ 1567
Total outlay: $ 45,292

This assumes loss of mortgage insurance in year 10; 3% cost increase yearly on the rent; 1% annual increase in renters/homeowner's insurance. Both homes are about the same size.

Does not include mortgage tax deduction, which drives the homeowner's total outlay down by thousands. Does not include tax increases for the homeowner, which increases total outlay. Tax increases are included in the rent. At the end of 30 years the homeowner owns a home worth hundreds of thousands.

Home ownership is an important "3rd leg" for retirement; 401K, pension, social security comprising parts of the other 2 legs.

I was putting my numbers together while Doug posted. I see we agree on this.

Doug: you are missing two critical data points: maintenance costs on the house, and investment return on the money the renter did not spend on the downpayment and closing costs.

When you include those, renting almost always comes out on top for periods of 1-5 years, and owning for 10+. The New York Times has a great graphic to illustrate this.

Home ownership is a like many things: good and bad. Living spaces are so different it is difficult to broadly paint houses as bad, condos as good, etc.

I own a duplex which was my first house. Now it is a rental, and I maintain it with as much eco-sense as is feasible. I built a new house, a very green new house in a vibrant downtown, and I love it. It is great to have the opportunity compared to former rental days to make all of my decisions to go as green as possible on my own properties.

Property ownership also allows financial freedom if done wisely. Most people don't understand that residential real estate is a long term investment vehicle and not a liquid asset that can be sold at any time. If done right, you can own a house in less than 15 years while typically experiencing growth in value and tax sheltering. This is a very green thing, because it gives people the ability to provide their own version of green to their own housing, and may help them afford many of the green products that cost a bit more, eco cars, clothes, food, etc. are not typically as cheap as there basement price alternatives.

Renting vs. Buying decisions based purely on a financial analysis depend on market conditions, the individual and of course, the location.

The analysis may come down one way or the other but it needs to include maintenance, insurance, taxes (both saved and charged), replacement costs, opportunity costs, asset appreciation, etc. and is jut not as simple as adding up mortgage payments and rental payments.

I think you're missing a zero at the end of those numbers Doug.

Doug the original - to be fair you should add a few things to the home ownership tally that are included in rent: water bill, sewer bill, garbage collection, property taxes, and property maintenance (snow clearing, lawn mowing, repairs, etc. In my case heat is also included in rent but that varies by place.)

Also - the rent/mortgage price difference varies by place too. The mortgage payment on a place like mine would be double the rent I'm paying (but I live in whacky Vancouver which isn't the norm) plus strata fees plus property taxes.

Let's rephrase the question: "Is urinating on yourself a good thing?". Think about it!

From personal experience living in my home is much cheaper.
Mortgage $250 (includes property taxes)
Electricity $12
Natural gas $15 (winter goes up to $65)
Water $14
Trash $0 (that's what recycling and composting costs)

Apartment based upon my friend's costs that I know of:
Rent $450 (includes heat, trash and water for a 1bdrm)
Electricity $30
That also means no lawn, less storage space, smaller size, really close neighbors and a deposit landlords often try to screw you out of.

When she moves out she'll reclaim nothing on what she paid, I'll receive whatever I get from the sale. Maintenance costs are really low on average as there is seldom anything that requires major work.

Wow Doug! Those numbers are low. Where do you live, a village in Mexico?!

Doug and others:

I live in Los Angeles. My rent is $1750 for a tiny place, about half the size of my old 3 bed 2 bath house with a swimming pool in Dallas Texas for more money than my mortgage was.

But to buy an equivalent place in Los Angels in the area I live (I ride my bike to my office in Beverly Hills), I'd pay about $550,000.

Do the math.

The discussion when it comes to economics cannot be held abstractly. It is entirely dependent on far too many variables.

That said, there is one constant: housing density is always going to mean a smaller footprint on the planet -- literally and figuratively. That's just common sense.

Yes, there are many more variables that must be applied - future value, lost opportunities, etc. Feel free to do the complex math and post it, this was just back-of-the-envelope.

stevejust - housing density does not mean a smaller footprint. Everything you use must be pumped in, trucked in... it all has to be brought to you. Then your air must be forced in (in a highrise), and your fluid waste must be processed in a treatment plant. The concrete that makes your building has a very high embodied energy. In the country you can put up PV panels, plant a garden, get your water from a well, and dispose of your sewage in an energy-free septic system. I discussed this on the Treehugger forum here:

http://forums.treehugger.com/viewtopic.php?t=2733

I'm amazed that everyone has mostly brushed past the very real material and psychological benefits of owning a home.

Yard and the accompanying ability to garden.

Ability to own pets.

Ability to green your house (I can't even hang my clothes up to dry in my apartment, since I live in damp, moldy Seattle).

Security in knowing you're not going to get kicked out of your living space when your landlord decides to sell or convert to condos.

The power to control what your living space looks like. Want to hang a picture? Do it. Want to paint your bedroom? Do it.

I don't disagree with any of the points made above, but these are certainly things that can't be overlooked.

It is really a dream for anyone to finally own his own home. But apparently, a lot of financial considerations come into play. That along with the governing ecological conditions, you just got to sit down and see the feasibility of it all. Dont let your emotions dominate the practical side of everything.

I feel that cohousing is generally more environmentally friendly (and fundamentally more resource efficient) than conventional single-family houses. This is the case whether you rent or own in those situations. High density conventional rentals certainly are resource efficient in some aspects - land area, close to city centres, some shared facilities - but are certainly not as good as they could be and there is little motivation by the owners to spend money to reduce environmental impact. I also see the advantages of home ownership (and want to buy a house this year).
The best of both worlds can be achieved with cohousing, whether it is using standalone houses in a plot in the country or inside an apartment building. All cohousing I have seen so far involve ownership of the house/land. I think that rental cohousing has a lot of potential in reducing the overall costs of renting and reducing environmental impact. If renting is combined with "energy service" provision (ie paying for energy services like a warm temperature or cleaned clothes rather than electricity and washing machines) then it is in the interest of the building owner & service provider to reduce energy costs and environmental footprint (ie use efficient heating/ passive solar heating etc).
I plan to do this myself one day - build an eco cohousing rental project where resources can be shared (laundry, cooking, luxuries, lawnmowing, common rooms, workshop, vege garden, internet access, car pooling etc), tenants pay an all-inclusive price that includes energy services like heating and economies of scale make environmentally friendly technologies and practices economically viable (ie solar hot water, high insulation, energy efficient lighting, greywater use, recycling & waste minimisation, maybe solar PV). I believe that this would not only be economically viable but a very desirable place to live because it would decrease overall rental costs while making available a social community and shared resources that individuals would not be able to afford.

I agree with Kasa, I love to grow my own foods in my garden, compost, and recycle. I live in a century home in a small town in N.E. Ohio. I love the idea of "recycling" an old house and greening it up. I agree that it's about "how" you live as much as where you live.

I fully intend to own someday. We rent a house right now, and I just can't picture going back to an apartment. I love the flexibility of a home.

This home didn't always have some of the advantages we enjoy right now. It's in southern California, so buying is impractical around here anyhow. But when we had major freezes two winters ago kill off the flowers our landlords had landscaped with, we were free to put in a vegetable garden. Can't tell you how wonderful that has been.

There's more we'd do if we owned. Tear out more space for gardening, for example. I like the amount of lawn we have, as it's just perfect for the kids to run about, but much of the yard space is just waste without a garden.

And that's the big thing that makes me want to own a home. The sheer advantage to being able to make our own decisions to green up the place would take care of many of the things that drive me nuts about renting.

Maybe in a year or two, the way prices are going down....

Home ownership to me just seems unfair. You have to open up so much of your private records and your life to these banks and other instiutions just to get a loan. But, what do they bring to the table? Do you get to see their credit ratings? I don't know, but this home ownership thing is just a way for corporate America to keep the machine running to fatten the elite. At least when I rent, I have the freedom to leave that community when I want, and become just as vested and interested in the new community that I'll move to.