Ahh, Pickwick Apartments. As young newlyweds, my wife Leslie and I rented a two-bedroom apartment on Elray Drive. It had a large kitchen, a washer-dryer, and a beautiful walk-in closet.
Our initial monthly rent, in the spring of 1974, was $190. As time passed we were blessed with two beautiful daughters, and the second bedroom had ample space for them. The monthly rent had increased to $210.
The landlord took care of any repairs. There was no grass to cut, no property taxes to pay, and when a neighbor complained about our sukkah, we were given two weeks to take it down. A life of pressure-free bliss…until a couple with whom we were friendly put a contract down on a house! To my dismay, other friends soon did the same. I remember my shock at the time. What were they thinking? What’s the matter with apartment living? Who wants to go look at houses? Who needs this pressure!?
Looking back, I have to chuckle at myself. It is true that renting has its charm and is financially necessary for many, if not most, young couples as they begin married life. But it is undeniable that the advantages of home ownership are profound. Purchasing a home should be an important goal for most young couples. Some of the advantages, in no particular order, are as follows:
Building Equity: Our rent at Pickwick may have been low, but when we moved into our home after five years in our apartment we took nothing with us but the girls, the furniture, and a refund of our security deposit. Five years after we moved into our home, its value had more than doubled. Many years later, when our daughters grew up, married, and began to look for homes in the Ranchleigh area, asking prices were increasing at the rate of about $10,000 per month. That is not an exaggeration. Homes were being sold the day they went on sale, and often the seller could choose between multiple offers that exceeded the asking price.
There are, of course, fluctuations in the housing market. A house is worth what someone will pay for it, and the principles of supply and demand apply. Sometimes the market is stagnant, and occasionally property values decline somewhat. (Northwest Baltimore is less likely to be subject to decline.) But the legal terms for homes are “real property” and “real estate.” Homeowners will almost always build equity in their homes, and that equity is not taxable. The equity may be used for a cash-out refinance to pay for simchas, or improvements to the property or to purchase other property.
Tax advantages: Leslie and I did not itemize our tax return when we lived in Pickwick. We just took the standard deduction. Home ownership makes many tax deductions available. The property taxes on a couple’s primary residence are fully deductible. All interest on mortgages secured by a primary residence is fully deductible. This is particularly helpful at the outset of a loan – typically the time when most young couples need the most help – since most of the monthly payment of principal and interest for the first few years consists of interest.
Higher rents versus lower interest rates: Rents in Pickwick – or anywhere else – are no longer $190 or $210. But interest rates are actually lower now than they were 40 years ago and considerably lower than they were 20, 30, or 35 years ago. The difference in the monthly expenditure of leasing a two-bedroom apartment and buying a two-bedroom condominium may be very little (although condominium dues must be figured into that equation). I have had the pleasure of handling several settlements in the past year in which young couples, newly married and having never rented, purchased condominiums in the Towers or the Bartonwood, or have purchased “starter” homes. Obtaining a mortgage in these cases may require the assistance of parents who have established credit. In my experience, most parents are more than happy to help in this way, and newlyweds who might be reluctant to accept this assistance can take comfort in the fact that they will probably have the opportunity to do the same for their children.
Pride of ownership: This is self-explanatory but very real. I have had the opportunity to handle many settlements, and thankfully, almost all have been very pleasant experiences. Some have even been in delivery rooms, when two happy occasions coincided! I feel very privileged to have been able to play a role in the happy milestones of my clients. Still, some closings are more memorable than others. At the end of a settlement that I conducted several years ago, the buyer asked me if he now owned the home. I told him that he did, and he began to cry. He told me that he was the fourth generation of his family in this country – and the first to own a home. That is one I will always remember.
