A client called to see if I had read the article in this Saturday's Mercury News real estate section, entitled "Those Who Rent Instead of Own Are Looking Smarter These Days," and asked what I thought of it.
My uncle and aunt in New York City enjoyed many years in their rent-controlled apartment, but as I now watch tiny co-ops in that City selling for over a million dollars, I wonder just how wise they were. Actually, there have been a few times over the years when I have recommended that potential clients remain renters. If someone expected a transfer within a year or two, the expenses of purchase and sale would usually eat up any gain in equity, even in a rising market, and in a slow market, there was a chance of losing money.
Over the years, I've watched tentative investors, waiting and watching for our local prices to fall, only to realize that they were "priced out" of our market.
There are other factors besides the loss of considerable equity. Renters face pet restrictions, unexpected raises in rent, and eviction when the property owner decides to sell or move back himself.
One renter quoted in the article said that she didn't have to stress out about the subprime problems, or whether "it's a sellers' market or a buyers' market". I see this as similar to someone so concerned with the volatility of the stock market that their long term investments are sitting under the mattress.
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