Thursday, March 5, 2009


Husband splorp! and I are renters. We don't want to be. We want to own our own home with our own free-standing walls, and space between us and the neighbors.

  1. We want to not hear the lead-foot upstairs thumping around at 11:30 at night while we're drifting off.
  2. We want to not hear people on the other side of that wall blow-drying their hair.
  3. We want to not have the water in the shower suddenly become freezing cold or boiling hot when the neighbor flushes a toilet or turns on their own shower.
  4. And most of all we want to not smell the cigarette smoke from our upstairs neighbor, and we want to escape their tendency to flick the butts in our garden area (so gross).

We have been in our current apartment for a year and four months, roughly. We just got a notice that the apartment complex wants us to sign a new one year lease at the same rate, or if we want to go month-to-month we can pay $140 more each month.

I am happy our rent has not increased this time. For the last several years we have watched rent increase dramatically in our area, and it has not been fun. When we moved into our current unit it was because our last apartment's rent had become so astronomical: over $1,600 for a two bed, two bath, with under a thousand square feet. At that point we decided to downgrade to where we are now and pay less, with the thought that as rent continued to increase we could stay here for quite a while and ride out rent increases.

The plan has worked reasonably well. We have been saving for a down payment on a house, and we have accrued quite a tidy sum in a bit less than a year, even with me being laid off last year. Still, it is not enough for us to go out and begin the process of home ownership. Close, but not yet.

So the question becomes, do we sign the 12 month lease knowing that if we buy a home in the next year we would pay one month's rent as a penalty for breaking the lease? Or do we pay the higher month-to-month rate, and stretch our budget to its max to afford a place of our own?

Ultimately our decision came down to simple math, and economics. We looked at what type of house we could get (and the condition it would be in) in the areas we wanted to live, and would we be happy. Short answer: no.

The economics: Housing prices have not dropped to where we want them (wish them?) to be. We went out to see what our money could get us, and even at the max of our current budget we would be looking at an old house with its original kitchen appliances (from the 1960s), tiny bedrooms, small square footage, no upgrades to the windows, bare landscaping, and situated next to a busy street where the road noise would keep me up all night.

The math: Our current rent is $1,430 per month. The month-to-month rate is $1,570. If we take the 12 month lease and then break it early we pay an extra month's rent in penalties (not to mention cleaning deposit, etc). If we pay month to month, it's an increase of $140 each month. So if we go month-to-month, after 10 months we will have paid an extra $1,400, or almost another month's rent at the lease rate.

Ick, that's a lot of extra money going out and doing nothing for us. So we determined that since our current savings is not enough to buy a house we would enjoy at a price we can afford, we're going to sign the lease and increase our savings so we can meet our down payment goal in the next year.


If taxes don't kill us.

We're still keeping our options open, so if housing prices in our area suddenly drop to meet our needs we have agreed that we can bite the bullet and pay the penalty to break our lease.

More math: if we break the lease at seven months and then pay the penalty, for a total of 8 months worth of rent ($1,430 x 8 = $11,440) we will actually come out paying less than what we would have paid month-to-month and stayed 8 months ($1,570 x 8 = $12,560).

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