AUDIE CORNISH, host:
Welcome to ALL THINGS CONSIDERED from NPR News. I'm Audie Cornish, in for Guy Raz.
Buy or rent? In normal times, that decision might have been easy for potential homeowners. But these are not normal times. We'll start today with a look at the embattled mortgage giants Fannie Mae and Freddie Mac, and how their fate could change the American dream.
But first, the story of a couple that is questioning whether homeownership is the only path to that dream. Meet the Cleavers - no, not June and Ward but Mark and Joanne Cleaver, who recently moved to Chicago.
Mr. MARK CLEAVER: We kind of looked at each other and said, you know, it's time to sell and maybe downsize. And then we started to look in the market and went, we don't like what we see happening, and we'd like the freedom of rent. The trade-off just seemed to be better and better, the more we looked at the rent option versus the buy option again.
Ms. JOANNE CLEAVER: You know, I think the rap on renting is that you're transitory, but I got to tell you, for us, it's an extremely appealing idea. I wouldn't call it being rootless; I'd call it being free.
Mr. CLEAVER: Well, when it comes to the transitory, I mean, the building we went into, I think it's about 20 years old. And there's people there that have been there since the day they opened. And they're very happy. Now, some of them are dying, unfortunately. But at the end of the day, they're all happy. And I'm looking at that going, you know, if we stay here until we die, it's okay by me. I love where I'm at right now.
Ms. CLEAVER: We don't know how long we'll be here, and we would lose money if we bought now. Even at today's mortgage rates, we would lose money if we moved within the next five to eight years. We've penciled it out; that's the deal. And frankly, condo prices would have to go down a good 30 percent more to overcome the negative effect of the transition and transaction cost.
Mr. CLEAVER: We lost money on our last house transaction. We had more money in equity going up to Milwaukee than when we came back - like I think most people. So, from that perspective, have I gained a lot of money? No. I've been better off to have been renting over that period and putting the net difference - between what a home would cost and what I'm paying for rent - into the bank.
I write my rental check and I think, this is worth every penny. Because I'll tell you what it does - is, it locks my cost in every month. I have no surprises. Utilities are included, parking's included. I write my check; I'm done for the month. It's a wonderful feeling.
Ms. CLEAVER: Although I will say, we'll continue to go to open houses and take a good look and see if there's something there that we - that really, absolutely, hits on all those cylinders.
But you know what? Those guys who look at Playboy, they're looking at something they can never have. And that's where real estate is for a lot of people these days - a lot of pretty pictures that's out of reach for most of us. It represents a glossy, airbrushed ideal that probably was never the reality to begin with.
CORNISH: That was Mark and Joanne Cleaver, now renters, after 28 years of homeownership.
For 39-year-old Brian Hollar of Arlington, Virginia, renting is actually a part of his financial strategy.
Mr. BRIAN HOLLAR: By not having a mortgage, it allowed me to, early in my career, put 20 percent of my income into my 401(k) plan. It also allowed me to participate in stock purchase programs through my company, and also just to save up money in mutual funds - and also just put some into the bank.
CORNISH: For Hollar, who's just reaching the height of his earning power, renting could make sense long-term.
Mr. HOLLAR: I can actually see myself as a lifelong renter. It has kind of given me some - what I like to call forced simplicity, which I kind of like. You know, it just kind of keeps my overhead very low and my lifestyle very flexible.
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