Photo: Flickr / mugley
You couldn’t pay Mark Williams to own a home again.
“Give me the money for it,” he said. “I’m still not buying a house.”
It’s not that he always felt this way. Williams (pictured at left) did profit handsomely from the housing market’s boom years, selling a Sacramento home in 2005 for more than twice as much as he purchased it for in 2001. He also bought, rehabbed and sold several homes with his friends.
“We literally flipped a crack house for a $40,000 profit before the first mortgage payment,” he said.
But after he lost his job as host of a political talk show in 2006, the conservative activist began to struggle to pay the mortgage on a McMansion that he moved into that same year in Lincoln, Calif. Three years later, Williams and his wife, Holly, filed for bankruptcy and sold the house in a short sale for $260,000, he said, adding that he had paid $564,000 to build it. Now Williams, who had a controversial tenure as spokesman for the Tea Party Express, leases a condo in Sacramento.
Williams is just one person in a group of homeowners-turned-renters who have emerged from the wreckage of the housing crisis: People who have sworn off homeownership — forever.
“We stupidly played by the rules,” Williams said. “We wiped out our retirement and everything trying to keep this thing afloat.”
A Small but ‘Committed Bunch’
Chris Clothier, who partners with Memphis Invest, an investment company that buys single-family homes and rents them out, said that many of his tenants have been scarred by the housing crisis and share Williams’ disillusionment with homeownership. They’ve gone through the stress, shame and embarrassment associated with foreclosure, and it has sullied their idea of homeownership, he said.
“They’re not going to enter the purchase realm again, regardless of interest rates,” Clothier said.
As foreclosures continued to push more people out of their homes, homeownership in the U.S. fell to the lowest level in 15 years to a rate of 65.4 per cent in the first quarter of 2012, according to Census Bureau data. The rate was 69 per cent at the end of 2005, the bureau said.
But those who claim to never want to own a home again don’t necessarily represent everyone who’s been forced into the rental market because of the housing bust. According to a June survey by online listing service Trulia, 78 per cent of renters at the time said that they planned to purchase a home. That was up from 72 per cent when the same survey was administered in 2011, perhaps indicating that some of the scepticism about owning a home had waned.
Those who reject homeownership, however, are a “committed bunch,” Clothier said. And experts say that vehement opposition to homeownership could continue to colour the discourse about housing for years to come.
“They will remain a vocal group who want the government to do what it can to prevent another housing bubble,” said Jed Kolko, chief economist of Trulia.
Fresh Appreciation for Renting
Still reeling from the housing bust, disillusioned renters like Thom Rigsby, 47, have also come to appreciate the benefits of renting, which they say outweigh the gains in equity of homeownership that are only possible in a stable market.
Rigsby said that he and his wife were only able to sell their home in Huntsville, Ala., for a $31 profit in 1996 after owning for several years. They then purchased a home in Dallas for $137,000 and, caught up in the frenzy of the housing boom, they borrowed against their equity over the next 10 years, he said. By 2006, he estimated, they owed nearly $300,000.
But then, Rigsby’s two businesses folded, and the couple eventually lost the home to foreclosure. Now Rigsby rents a single-family home back in Huntsville and has enjoyed shedding the ancillary costs of homeownership.
“It’s not just the mortgager that you have to pay every month,” he said. There’s maintenance and upkeep costs and, he added, when it comes time to move, selling costs take a big bite out of a return. (In Rigsby’s experience, selling costs equaled 3 per cent of his home’s value.)
Sue Koch, a Chicago-based social-media consultant who was forced to sell one condo she owned for a $20,000 loss and now stands to “lose an exceptional amount of money” on another, said that she also cherishes the conveniences of renting.
“If there’s something wrong with the unit or building, I can call a manager, and he takes care of it,” said Koch, 40. “If I wanted to, I could pick up and go somewhere else.”
Debt-Free but at the Cost of Stability
Not everyone who has found themselves in the rental market wants to pick up and go like Koch, though. They still want the feeling of stability in having their own homes, which is why many have chosen to rent single-family houses. However, that very arrangement could be the biggest gamble in maintaining a long-term residence.
Steve Jason, owner of Stara Estates, manages more than 30 rental homes in south Palm Beach County in Florida. He said that many investors who own single-family rentals have either a “short-term or midterm” vision, in which they intend to sell at a profit after home prices appreciate.
“Anytime you’re renting a property, you run the risk that the owner will sell it,” he said.
Jason, who converts homes into rentals, estimates that about half of his tenants who were former owners will never buy homes again. Many “came to the realisation themselves when they lost their homes, that it just wasn’t for them,” he said.
Many families who currently rent may be offered the option to buy, but theoretically those who remain firmly opposed to homeownership would refuse it, even if they could qualify for financing. That would mean they would have to relocate.
But the hassle of finding somewhere else to settle their families may be worth it, in their minds.
“Severe economic crises often have long-lasting effects on the people who live through them,” Kolko said.
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This story was originally published by AOL Real Estate.
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