I hate to keep posting these kinds of stories but they are abundant. For every one person you read about in a pickle in their retirement years there are thousands more just like them you never hear about. They are living lives of quiet desperation.
I've had this article saved for a while and seeing it is from November 2016, most likely the situation has only gotten worse for this woman. Article Here She was earning about $80,000 a year and when she moved into her apartment in 2012 the rent was $2,397 but it rose to to about $3,200 by 2016 which is over a 33% increase in 4 years. Did her salary go up 33% in 4 years? I doubt it. At the time of the article she was living in cheap motel rooms....at 67 years old.
In Los Angeles where I live, the homeless population increased 23% in 2017 from 46,874 to 57,794 - Study Here This is due to many factors some of it drug use but some of it due to unmanageable rent increases. Can you absorb a 10% , 20% or 30% increase in your rent over the next few years?
As I am in the mortgage business in Southern California I talk daily to potential home buyers and it pains me when young people, who are earning a good salary, opt to continue to rent rather than buy. Yes their rent is usually lower than what it will cost them to own however...they have no control when they rent. Despite "rent control" there are events that take place that end up displacing people from rent controlled apartments. And over time that 3% increase a year adds up . Rent control prevents mobility....people want to move but they can't or don't since rents for similar vacant apartments are usually higher. Living in a rent controlled apartment is a dead end future....it's limiting and not expansive.
Now imagine you suck it up and give up your rent controlled apartment for $1400 a month and end up buying and it costs you $2500 a month. On a fixed rate your payment will not change in the next 30 years! Then after 30 years it will be gone. Disclaimer - your property tax and insurance can and most likely will go up but your mortgage principle and interest payment will not move one inch.
If you continue renting, your rent will go from $1400 to $3398 over 30 years. In 30 years do you think you will be retiring? Will you be able to afford $3398 a month for rent on your retirement savings or social security income? If it still exists my social security income won't be $3398 a month. But since I own and have a rental unit on my property my mortgage will be $0, the income from my rental unit will be minimum $2500 a month. I will be better off than anyone renting even if they are sitting in a rent controlled apartment right now. Plus with my property paid off I will have $0 in a mortgage payment, income from my rental unit and I will own an asset worth hundreds of thousands of dollars.
Please, please reevaluate renting vs buying. Yes you will most likely need to scale back something in your life when you buy in California...the money you spend at Starbucks or going out to eat but now you can throw fabulous dinner parties in your garden, make your own Caramel Macchiato on your fancy new Cappuccino Machine in the kitchen you own. You will adjust and over time you will be richer and more secure for taking the plunge!
I'll bet the woman in the article is looking back, thinking about how different her life would be now if she had bought a 2-4 unit property when she was 37. I feel for her.
I've had this article saved for a while and seeing it is from November 2016, most likely the situation has only gotten worse for this woman. Article Here She was earning about $80,000 a year and when she moved into her apartment in 2012 the rent was $2,397 but it rose to to about $3,200 by 2016 which is over a 33% increase in 4 years. Did her salary go up 33% in 4 years? I doubt it. At the time of the article she was living in cheap motel rooms....at 67 years old.
In Los Angeles where I live, the homeless population increased 23% in 2017 from 46,874 to 57,794 - Study Here This is due to many factors some of it drug use but some of it due to unmanageable rent increases. Can you absorb a 10% , 20% or 30% increase in your rent over the next few years?
As I am in the mortgage business in Southern California I talk daily to potential home buyers and it pains me when young people, who are earning a good salary, opt to continue to rent rather than buy. Yes their rent is usually lower than what it will cost them to own however...they have no control when they rent. Despite "rent control" there are events that take place that end up displacing people from rent controlled apartments. And over time that 3% increase a year adds up . Rent control prevents mobility....people want to move but they can't or don't since rents for similar vacant apartments are usually higher. Living in a rent controlled apartment is a dead end future....it's limiting and not expansive.
Now imagine you suck it up and give up your rent controlled apartment for $1400 a month and end up buying and it costs you $2500 a month. On a fixed rate your payment will not change in the next 30 years! Then after 30 years it will be gone. Disclaimer - your property tax and insurance can and most likely will go up but your mortgage principle and interest payment will not move one inch.
If you continue renting, your rent will go from $1400 to $3398 over 30 years. In 30 years do you think you will be retiring? Will you be able to afford $3398 a month for rent on your retirement savings or social security income? If it still exists my social security income won't be $3398 a month. But since I own and have a rental unit on my property my mortgage will be $0, the income from my rental unit will be minimum $2500 a month. I will be better off than anyone renting even if they are sitting in a rent controlled apartment right now. Plus with my property paid off I will have $0 in a mortgage payment, income from my rental unit and I will own an asset worth hundreds of thousands of dollars.
Please, please reevaluate renting vs buying. Yes you will most likely need to scale back something in your life when you buy in California...the money you spend at Starbucks or going out to eat but now you can throw fabulous dinner parties in your garden, make your own Caramel Macchiato on your fancy new Cappuccino Machine in the kitchen you own. You will adjust and over time you will be richer and more secure for taking the plunge!
I'll bet the woman in the article is looking back, thinking about how different her life would be now if she had bought a 2-4 unit property when she was 37. I feel for her.
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