Before last Monday, I used to joke that I once bought a couch on impulse. That silly little gaffe seems so quaint to me now, for today, in the mother of all impulse purchases, I bought a home.
No, really. There were balloons, an "Open House" sign, a stream of shoppers, an agent, and another agent. and then, 18 hours later, I was signing some papers saying that the place was all mine. As a personal-finance writer, I know how these things are done. But usually they happen not to casual passers-by, but to people who are actually shopping for real estate.
Yesterday, I was a renter. Last month, I was a renter. Last year, I was a renter! A headstrong, savvy, know-it-all renter, I bragged about "Why I Won't Buy" on these pages. No shackles of mortgage payments for this carefree gal, said I. On a whim, and with 30 days' written notice and a secure storage unit for my stuff, I was outta there with a hat toss and a twirl, and just a single suitcase on wheels packed with six perfectly accessorized outfits.
Never mind that in the past seven and a half years, I've remained landlocked -- living in four apartments in three buildings, each exactly within a one-and-a-half-block radius of where I now sit, gazing across the street at the first apartment I called home.
Still, I, a savvy renter, held the high ground in this insane real estate market. Properties in my neighborhood were lurching up 20% or more a year. You people are crazy! I'd say to myself about all those buyers, ignoring the Clydesdale clomping of my upstairs neighbor. One town over, homes inflated a cartoonish 60%-plus last year. Please!
I was living in a historically significant property in the heart of Old Town Alexandria, Va., with soaring 10-foot beamed ceilings, exposed brick, a working fireplace, deep mahogany hardwood floors, and huge windows where the morning sunlight streams in.
And my rent? Dirt-cheap.
My landlord was living out her retirement in France, unaware of what was happening with real estate and rentals. The property management company, for whatever reason, set my rent at an unheard-of low rate. With such a low cost of living, I matched my rent in savings every month, socking it away in a savings account earning a pittance. Even so, the balance soon resembled a down payment. Every extra dollar went into that account -- an amount that could have blossomed had I invested in some Hidden Gems. But I didn't.
I did the math. I did the math over again. I input my numbers in the "rent vs. buy" calculator and fantasized that the people who wrote the algorithms had my oddball scenario tacked up in their cubicle to marvel over while wolfing down their Value Meal. Year after year, the calculator conceded that, yup, renting's the way to go: "Renting will cost you $39,741 less than owning over the 5 years, in today's dollars," it told me.
I lobbed a "Feh!" at everyone who told me what a fool I was for flushing rent money down the toilet. (Why is it always down the toilet? Aren't there more creative ways to dispose of currency?)
Then one of the inputs changed. My building was sold, and the new owners were not renewing leases. Renovations would start on each unit as tenants moved out. On June 1, my historically significant property in the heart of Old Town Alexandria, Va., with the soaring 10-foot beamed ceilings, exposed brick, working fireplace, deep mahogany hardwood floors, and huge windows where the morning sunlight streams in would no longer be mine. My lease was up.
Similar rentals were going for nearly twice as much. I knew I could afford it, given that I had essentially lived within a budget that accommodated a pricier rental. But then I did the math using the most conservative appreciation rates in both rent and property value: "Owning will save you $5,115 compared to renting over the 5 years, in today's dollars," I was told this time.
In one click of the mouse, my superior renter's attitude melted away. And what could have been a monumentally conservative savings strategy suddenly looked like a brilliant financial play.
So on Sunday, while walking my dog around the block, I became a home-ownership kinda gal. I saw balloons on a historic building, opened the door, walked upstairs, and entered a light-drenched home with deep honey-colored hardwood floors, high ceilings, exposed brick, and a working fireplace.
To whom do I make out the check?
Dayana Yochim will be heading to the Buying or Selling a Home discussion board, hat in hand, apologizing for years of renter's smugness. Her approach to home buying should not be construed as an endorsement or recommendation of the impulse-purchase process. Unless it's for cute shoes.