Why I rent, despite low mortgage rates
Mortgage rates are in the basement. Real estate is more affordable. But in this dismal job market, Americans need to stay mobile. For now, home is where I lay my head, and it’s a rental.
This new home is for sale in Winter Garden, Fla. Home prices have continued to fall in most major American cities. But purchasing a home has its downsides: Ownership also ties you down.
AP Photo/John Raoux
Orono, Maine
I’m 31, have a good job, some savings, and good credit. I live in a part of the country with very affordable real estate and I’m a renter. This is typically when an American like me goes house shopping.
Pass.
Why on earth would I borrow a few hundred thousand dollars for a house? Home values continue to languish across the country and the Federal Reserve is all but guaranteeing that mortgage rates will be rock-bottom for years.
If I buy property, I face considerable risk in a fetid economy that my future neighbors are unemployed, insolvent, and facing foreclosure, which will sabotage the value of my investment.
Plus, there’s all the cost of home maintenance. American wages are flat (professors at the university where I teach have not received a pay increase in years and are looking at a likely cost of living increase of half a percent this annum). Meanwhile, the cost of food and energy surges.
No thanks. If I don’t shop in a sketchy produce market, I won’t buy a lemon.
More importantly, though, I don’t want to physically anchor myself to a piece of land in the United States, which features a wretched job market, towering national debt, and inept legislators. People need to stay limber and keep their running shoes on for job relocation.
Fortunately for Americans, as I’ve mentioned before, most of the world’s developed countries will face labor shortages in the coming years that will force them to hire outsiders. This is good news for Americans who may not be able to find work at home. Maintain global skills and a valid passport, and you’ll be able to find work. Somewhere.
It is true that the digital age permits global call centers in Kolkata, India, and allows radiologists in Singapore to read MRI scans of Alaskans, but the global economy still requires flexibility and mobility. At the very least, you won’t be tied to an unloadable duplex in Las Vegas or Youngstown, PA., when rewarding work awaits you in Lubbock, Texas, if you can easily move around. The only thing worse than being broke is being broke and immobile. A mobile person, by definition, can’t be in a rut, right?
One of the worst places in the developed world for young people right now is Spain, and young Spaniards are fleeing their homeland in hordes. Youth unemployment in Spain is nearly 45 percent, reports GlobalPost, and scores of educated young Spaniards are leaving. No one is projecting that the US economy will get this bad, but Americans should still have an exit plan.
If some sectors of the US economy struggle because young people like me can not or will not buy homes, so be it. Realtors, land developers, and home improvement retailers were among the pom-pom people who cheered Americans to chase houses they were told would surely accrue value.
Well, that was a sham, and it’s not my responsibility to put the pep-band back to work. Plus, saving is good for the long-term health of the US economy. A spending binge functions like newspaper in a fire: It generates a great deal of energy, but quickly dies down and leaves an ashy mess.
I’ll keep an open mind. I could be persuaded that home values are done tanking, mortgage rates won't continue to fall, and that American workers have renewed security, but the proof is in the appraisal. I need to see numbers that currently just aren’t there. For now, home is where I lay my head, and it’s a rental.
Justin D. Martin, Ph.D., is the CLAS-Honors Preceptor of Journalism at the University of Maine and a columnist for Columbia Journalism Review. Follow him on Twitter: @Justin_D_Martin