WageslaveX14, on 18 February 2011 - 04:54 PM, said:
At the risk of feeding a troll, I can't resist responding.
Renting is very different to being in debt when your debt is secured on something as illiquid as a house.
Take my own circumstances as an example:
I have a lease which I can terminate on one month's notice and be free of that obligation. If my circumstances change, such as losing my job, I can terminate my lease and, depressingly, move back in with my parents faster than you can say 'yes Mum, I know life is still worth living'. The downside risk is minimal, but obviously with no chance of a gain from HPI.
If I have a mortgage, however, if I lose my job I still have to make repayments until I am able to sell my house (assuming I couldn't get a new job). Given current high prices and low transaction levels, the chances of a price correction are high and the prospects for getting a quick sale at a price which wouldn't see me lose a chunk of my deposit/equity are low. You are also vulnerable to interest rate shocks for which there is no comparable risk when renting.
Assuming nothing goes wrong in your life, the practical realities of being in debt are pretty much the same as those of having rental commitments.
When things go wrong, though, being in debt is far, far worse.
But there is another choice that I took in 1990 when I lost my job in a falling housing market .
I went back home to live with mum and dad and rented the flat out. I asked the bank if I could and they said no , It was rent it out or lose it so I ignored the bank and decided on my own personnel survival .
I was completly pissed off giving the keys over to this couple who moved into my home and I went back to the box room at my parents that I had escaped a few years before. A very wise man said to me don't feel to down , YOUR COW IS STILL ALIVE AND WILL CALF AGAIN . Soon after I got another good job and was able to return to my home a year later when the tennancy had expired .
With housing in short supply it is easy to let property so moving out and letting the property can save you losing it for ever. Apparantly many young people like me did that back then the banks and building societys did not like it but rather than have more defaults on their books they turned a blind eye. We were given the name GHOST LANDLORDS at one point by the media.