Owning a home has long played a significant role in the American story; the notion that buying a house is the stepping stone to wealth and happiness goes back a long time. But the housing bubble has burst, and many local homeowners are living in the shadow of the white picket fence. This is Part 3 of a WBUR series: The Depreciating American Dream.
BOSTON — They’re exactly the type of couple you’d expect to be on the market right now, to get that first-time homebuyer tax credit before it expires. But instead of spending this recent Sunday morning mapping out open houses, Prashant Jeloka and Meenal Bagla are scrambling eggs with onion and peppers.
They’re whipping up wheat pancakes. They’ve got the kitchen radio on. Prashant says they really enjoy life as renters — even though their friends and family look down on them for being somebody else’s tenant.
“There’s a lot of social pressure,” Prashant says. “Because everyone seems to think that renting is not as good as buying.”
But Prashant and Meenal say they’re not throwing money away.
The two are married, on either side of 30. He works in computers; she’s a consultant. They met as students at UMass-Amherst, and they moved to Boston during the housing boom, when all of their friends were buying, when talk of interest rates dominated parties.
“Initially, it’s a very powerful motivator to feel you should be buying,” Prashant says. “I realized I didn’t want to be the one who threw money away. Five years later people would be laughing at me, you threw money away, you were a fool.”
But Prashant and Meenal actually sat down to do the numbers, they realized they would be fools to buy.
What you need to know about Prashant is that he’s labeled his shelf of personal finance books according to the Dewey Decimal System. Extremely detail-oriented. But it’s that same quality helped the couple do a thorough cost-benefit analysis of buying.
“Short-term it’s very expensive to do that. It’s a hobby. It’s a very expensive hobby,” he says.
A hobby that when they thought about it, they didn’t even want. Meenal says what they really want is time to enjoy living in Boston and all that it offers. And: the flexibility you don’t have when you own a home.
“If either of us wants to experiment, because, I don’t know one of us wants to become an entrepreneur and we want to take some time off to try our hand at our own thing, or one of us wants to become a volunteer and you can’t necessarily have an income, I mean you can’t do those things if you’ve bought a house,” Meenal says. “But if you’re renting, it’s easy to downgrade.”
So instead of putting their money into a down payment, it went into the stock market. They even allocated 10 percent to a real estate investment trust, so they’re still invested in real estate, just not all in on a single property. And Prashant thinks they’ll see better returns than paying off a 30-year mortgage.
“The stock market can be that long of a commitment, and it should be. However, at least, getting in and getting out is much easier. That’s very different from homeownership.”
Prashant and Meenal also thought about this: Nowadays people are expected to change their careers several times over a lifetime. So they wanted to be able to pick up and move if San Francisco or New York came calling with a better job.
“So I’m actually paying for less flexibility in my life and I’m paying for having less chores in my life right now,” Prashant says. “And long-term, yeah, it is more expensive to rent. But I’m not willing to think long-term yet.”
Forty Years On, No Regrets
But even long-term renting can pay off, at least according to another couple in Brighton. As of this August, John and Barbara Horan will have rented the same apartment for 40 years — a three-bedroom in a triple decker right off of Brighton Center. Their two sons have long moved out. For Barbara, there’s no reason for her and John to leave, too.
“I never missed not owning my own house because I always lived in a three-decker,” Barbara says. “I’m comfortable, I feel safe, there’s people upstairs there’s people downstairs. I feel this is my home. Because I’ve lived here for so long.
“The noises are mine, the creaks in the floor are mine. He’s mine. He’s still coming home,” she says of her husband.
When they first moved here in 1970, rent was $125. Their landlord likes them, obviously, and they just about always paid below market rent. So John says it really never made financial sense to buy a home.
“Yeah, if I won the Megabucks — and she’d probably convince me not to buy a house — but I’d go down the Cape and buy a … second home,” John says. “Summer. I wouldn’t necessarily move out of here. There’s no reason to move out of here.”
John figures they have more in the bank today than if they’d bought. They money they saved by paying cheap rent and never paying maintenance went into trips abroad, retirement savings and college funds. One son went to Bowdoin. The other to Boston College. Barbara wouldn’t change a thing about the life they lived as renters.
“Part of it, it’s not only the money you saved. You’ve had a virtually stress free living all these years,” she says.
The Costs — And Benefits — Of Freedom
It’s the same sort of freedom that the other Brighton couple enjoys, the young one. Prashant Jeloka and Meenal Bagla spent a recent Sunday playing tennis.
Then they went to a barbeque with friends, where Tandoori chicken sizzled on the grill.
Their friends all own homes, and they give Prashant and Meenal a hard time about not owning. But that doesn’t bother the couple anymore. Prashant says as far as he’s concerned: “I am living the American Dream. I have a good job, I enjoy the weekends, have friends. Good food. That’s the American Dream, what else?
“The house doesn’t have to be part of it. If you like it, yeah. But don’t just buy into it because someone defined it as such.”
Prashant’s advice: Figure out what you want, what works for you, and do that.