TIME advice

How to Decide Whether to Rent or Buy a Home

toy-house
Getty Images

Thinking about how long you'll be in the property

When determining whether or not you’re ready to be a homeowner, there are a number of factors to consider — several of which are personal, and hinge on exactly where you want to live.

“Many property experts would say that there are parts of the country where renting outweighs the costs of ownership,” says Brian Sergi-Curfman, a Realtor in Pittsburgh. “Potential buyers or tenants may find themselves in markets that are depreciating or, conversely, in areas where values have priced them out of the housing market. The decision to rent or buy should be influenced not only by market trends but by the client’s long- and short-term goals.”

Sheryl Grider Whitehurst, regional vice president for the National Association of Realtors, says home ownership rates are declining, having reached a peak at 69.4 percent in 2004. In the first quarter of 2015, the home ownership rate was 63.8 percent, which is the lowest it’s been since 1994.

“Young people are delaying buying a home due to student debt,” Grider Whitehurst says. “They just aren’t earning enough to carry a mortgage and the debt. Another factor is the economic crisis that occurred in 2007. People started losing their properties and have to get their finances in order to buy property again.”

And yet nationally, buying a home is 35 percent cheaper than renting, according to Trulia.com. With 30-year mortgage rates available below 4 percent, home ownership appears more affordable than many might think.

The economics of where you live certainly weigh heavily on the decision to buy or rent, but what other factors should you consider?

The pros and cons of renting

After 20 years of owning a three-bedroom, three-bath, two-story home on a steeply sloped lot, empty nesters Gay and Harry Stephens were ready to downsize. They now live in a two-bedroom, two-bath apartment in a building that was once an all-girls Catholic school in Newport, Kentucky.

“We wanted to rent because it’s easier to take care of and we have the ability to turn the key and walk away when traveling,” she says. “There’s no yard work, and someone else is now responsible when there are maintenance issues.”

Gay Stephens says the couple also likes their location and accessibility to favorite restaurants and entertainment venues in Northern Kentucky and downtown Cincinnati.

“I was surprised how much I enjoy urban living,” she says, adding that there are some negatives to renting, such as slow response times for repairs and not building equity through their housing costs.

Other disadvantages to renting can include unanticipated rent increases, non-renewal of a lease, and not being able to customize the living space.

“On the other hand, you’re not tied to the property nor do you have to come up with a down payment and closing costs to live there,” says Realtor Josh Bushner in Austin, Texas. “If you’re new to a city or not sure you’ll be there for longer than three years, I usually recommend renting until you’re certain you’ll be staying longer. Also, make sure coming up with a down payment won’t put you in a cash-strapped position. Take time to get familiar with a city and find neighborhoods that will meet your lifestyle.”

Elizabeth Cales of Clarksville, Tennessee, says that despite being financially secure enough to purchase a home, she’s happy to rent.

“It’s a buyer’s market here,” she says. “You can get a mortgage for $650 a month, which is what we pay in rent, but with my husband’s work we’re not sure we’ll be here in three years. We don’t want to take a loss on a house we might not be able to sell.”

Cales says one of her favorite aspects of apartment living is the close-knit community, so much so that the Angie’s List member gave her complex a positive review. “The neighbors are all close and it’s just nice,” she says. “I feel more secure having people around.”

The pros and cons of owning a home

Home equity is one of the biggest assets to buying instead of renting. In addition, most buyers can obtain tax benefits by writing off real estate taxes, mortgage interest, and specific closing costs, whereas renters don’t typically get federal tax deductions. Although, some states will offer a tax break for renters.

In addition, house renters often don’t realize that they’re paying the principle, interest, taxes, and insurance (and usually some extra padding for landlord repairs) in their monthly payments, which could be put toward building equity in their own homes.

Newlywed Leslie Radigan-Yodice of Albuquerque, New Mexico, initially thought she and her expanded family would move from an apartment into a rental home, but after figuring out the finances, they decided in the summer of 2014 that it was a great time to buy.

“My monthly payment is about $300 more, but we have a four bedroom, two-bath house with a garage,” she says. “I love that we’re building equity while creating a true home. And I love that I don’t have to walk across the street to do my laundry.”

Sometimes, the decision to own a home comes down to certain intangibles.

“While there’s definitely a strict financial answer to whether it’s better to rent versus buy, don’t discount the emotional part of the process,” says Deb Agliano of Re/Max Andrew Realty in Medford, Massachusetts. “For some people, it’s not a matter of what makes more financial sense, emotionally they want to know that they own their own home.”

Mary and Garret Goetzinger of Portland, Oregon, say owning their four-bedroom Craftsman is a welcome change after 15 years of renting.

“Being able to create your own space and freedom to design it however you want is a positive,” the couple agree, noting that they did have to move a little farther out than they anticipated to get the house they wanted. “Owning a home isn’t cheap, and we’re on the hook if something goes wrong.”

Handling the maintenance, upkeep and repairs is one of the biggest differences for Janice Pare and her husband Gordon Wichern, who recently purchased a three-bedroom Cape Cod in Arlington, Massachusetts.

“One other negative is the lack of flexibility to move whenever and wherever we want with just 30 days notice,” Pare says. “But we feel that being homeowners makes us more invested in our community, and we plan to get more involved in our new part of town.”

Deciding to buy a house is a big responsibility, and potential homeowners need to answer some serious questions before taking that leap, says real estate agent Dianne Hansen in Fairfax, Virginia.

“Will it give you a sense of pride?” she asks. “Are repairs stressful or something you’re willing to learn to do? How long will you be in the house? If it’s less than two years, it might not be worth buying. If you’ll be there five or more years, it’s a good bet.”

So … rent or buy?

After weighing all the factors, it might come down to what will make you happy.

“If you’re not sure if you want to buy or rent, think about the enjoyment you will get out of owning your own home,” Hansen says. “If there isn’t any, you might want to rent for a few more years.”
Sergi-Curfman agrees, and says no one should frown upon the idea of renting.

“The American dream has always included the white picket fence surrounding a house in the suburbs, but for many people, this dream is really a myth,” he says. “Renting should never be looked at as inferior to owning a home. You and only you know your goals best, and it is incumbent upon any potential buyer or renter to seek out professional advice from people that they trust to give them a fuller financial picture of their current and future goals.”

Yet, Grider Whitehurst says despite the potential attractiveness of renting, most people want to own a home at some point in their lives.

“Overwhelmingly, Americans see home ownership as a good investment,” she says. “You have to pay to live somewhere — whether you rent or own. You just have to know when is the right time for you.”

This article originally appeared on Angie’s List

More from Angie’s List:

MONEY buying a home

Why Millennials Are Better Off Waiting 10 Years to Buy a Home

Millennial in front of house for rent
Daniel Grill—Getty Images

A new Fed study finds most young adults require years of saving before they can afford home ownership.

In a report sure to make the real estate industry cringe, researchers at the St. Louis Federal Reserve suggest most young adults postpone home ownership for years, if not a decade or longer. This comes as the housing market is beginning to boom again and older Millennials, a group that generally has eschewed homeownership, shows signs of wanting to take the plunge.

Can this be sound advice? Home ownership has been a reliable long-term wealth builder for generations. Often home equity is retirees’ largest asset and, along with Social Security, enough for them to live out their days financially secure.

The housing bust changed the calculus. Flipping and other short-term strategies, and risky nothing-down and no-documentation mortgages, contributed mightily to the bust. Yet short-term moves have always been dicey. Properly considered, a home is less an investment than a forced savings plan and place to live. Over time, real estate keeps pace with inflation and a stable, affordable mortgage provides a valuable tax deduction.

The Fed study does not dispute that. It is an examination of age and wealth, and finds that younger families are on track for a lower net worth than all previous living generations. Adjusted for inflation, the median wealth of families headed by someone at least age 62 rose 40% between 1989 and 2013—to $210,000 from $150,000. Meanwhile, median wealth of households headed by someone age 40 to 61 fell 31% to $106,000 and median wealth for younger families fell 28% to $14,000.

Researchers conclude that younger families would be better served by maintaining a personal asset mix that more closely resembles the asset mix of older families—less debt and less real estate relative to their other assets. In other words, stretching for that first home when you have no other savings and little ability to save going forward is a huge mistake.

This “mistake,” by the way, is one plenty of families in previous generations made—and for many it paid off well. What seems to have changed is a greater degree of speculation that leads to a boom-bust pattern in the housing market, one that can wipe you out in the short term if your timing stinks. The Fed researchers write that young people should “delay purchase of a home with its attendant debt burden until it was possible to buy a house that did not make the family’s balance sheet dangerously undiversified and highly leveraged.”

John Bucsek, managing partner of MetLife Solutions Group, finds merit in the Fed’s argument, saying that young families should rent for years for less money than a mortgage would cost. That preserves career flexibility and cuts monthly costs. They should begin saving in a Roth IRA to build long-term wealth through a diversified portfolio. They should also pay down student loans and other debts. Later, when they have more assets, if need be they may withdraw their original Roth IRA investment plus up to $10,000 penalty free for a first-time home purchase.

That is sound strategy, and would have been especially valuable advice before the housing collapse. Today the housing market is on firmer footing. Banks remain careful about extending credit, and in June the median price for an existing home rose 6.5% to a record $236,400, at last topping the previous high of $230,400 set in July 2006—before the bust. The pace of homes being sold is the strongest since 2007. All this suggests the market is in full recovery, though the prominent economist Robert Shiller, as ever, is raising red flags about a bubble.

At the same time, Millennials, a generation that pioneered the sharing economy and many of whom have claimed to never want to own anything, are poised to enter the housing market. A Digital Risk survey found that 70% of 18-to-34 year olds are interested in purchasing a home in the next five years. If they act on that interest, it will further boost the housing recovery—and if they commit to staying their house and saving a bit on the side, they will begin to build long-term wealth much like their parents and grandparents.

Read next: These States Offer the Most Help for Buying a Home

MONEY buying a home

These States Offer the Most Help for Buying a Home

"For Sale" sign outside town home in Society Hill neighborhood, Philadelphia, Pennsylvania
Frances Roberts—Alamy Society Hill neighborhood, Philadelphia, Pennsylvania

Grants and no-interest loans are available if you know where to look.

Trying to scrounge together a down payment for a house? Your first instinct may be to hit up mom and dad. One more option you shouldn’t overlook: The state where you live.

Each of the 50 states has some sort of program to help homebuyers, especially those making their first purchase, according to mortgage Web site HSH.com, which recently compiled data and ranked the states.

The most generous state of all is Pennsylvania, where homebuyers have access to no fewer than 11 programs, including ones for first-time and repeat buyers, and even assistance for homeowners looking to make improvements. The Keystone state was followed by Wyoming and New York.

While not necessarily new, state homebuyer assistance programs may be more critical than ever. That’s because seven years after the 2008-2009 financial crises, lingering after-effects like depleted savings and an expensive rental market have made it particularly hard for 20- and 30-somethings to buy homes.

Traditionally, getting a mortgage in the strictly private market requires a down payment of 20%. Yet the Federal Housing Administration makes it possible to buy homes with as little as 3.5% down, with the caveat being that you will be required to pay mortgage insurance. The assistance offered by states — often in the form of grants or no-interest loans — can help get you to the finish line.

Not all programs are available to all would-be homeowners. As well as targeting groups like veterans and the disabled, many state programs have income caps that reduce or eliminate benefits for those making more than a certain amount. One thing you shouldn’t assume, however, is that programs only target the needy. Many are open to middle-income earners.

For instance, Pennsylvania offers closing-cost assistance up to $6,000 in the form of a no-interest 10-year loan to borrowers at participating lenders. The program is open to all borrowers regardless of income or whether it’s your first home. In addition, first-time homebuyers (and some repeat buyers) can turn the first $2,000 of their federal mortgage income tax deduction into a much more valuable tax credit. While incomes are capped, you can earn up to $97,300, or $113,500 if you have kids, and live in relatively high-cost counties like Philadelphia.

Want to find out what your state offers? The HSH directory includes links to state pages with detailed descriptions of individual programs. But you don’t have to be an expert to claim the benefits. Most assistance is arranged through private lenders. So if you think you might qualify, look for participating banks that should be able to help you enroll.

One final thing: If there isn’t much on offer in your state, you should also check Web pages of county and local governments. Even states that offer relatively little help, like Hawaii and Kansas, may fill in the gap with county level programs, according to HSH.

 

MONEY buying a home

7 Ways to Avoid Real Estate Negotiation Nightmares

78740737
Fuse—Getty Images

#3: Keep stubbornness in check

Do you squirm at the thought of negotiating with sellers at garage sales, flea markets, and antiques stores? Even if you’re pretty confident (if you do say so yourself), the process of buying a house can be filled with real estate negotiation nightmares.

Here are some out-of-the-box negotiation ideas that can help turn a possible nightmare situation into a good deal for you.

1. Don’t shy away from a challenging deal

Rachelle Schreiber, a real estate agent with Realty Group International, comes right out and discloses to potential buyers when a deal could be “challenging.”

For example: Divorcing spouses don’t always agree — on anything, but especially not selling their marital home. But that doesn’t mean you should walk away. Instead, rely on the agent to guide the process. That way, “when the sellers don’t agree on terms, we have a less painful reaction [from buyers].”

2. Be realistic about repairs

You really want to sell your house as is, but the only acceptable offer you’ve received includes making repairs — and you don’t have the time to devote to the research, vetting, and oversight those repairs require. Don’t fret. You may be able to get the buyer to do the legwork for you.

“The buyer needs to carefully calculate the cost of doing the repairs,” says Susan Naftulin, CEO of Rehab Financial Group. The seller can then offer a credit for the cost of repairs at closing instead of risking a lost sale.

As the seller, you should carefully double-check the buyer’s numbers so that you’re not reducing your price by more than is absolutely necessary.

3. Keep stubbornness in check

Sometimes egos can ruin a home sale. When that happens, take a deep breath and remember your goal.

“I just had a deal where my buyers paid $300,000 over the asking price for a single-family home,” says Roh Habibi, a real estate broker with Coldwell Banker and star of the TV show Million Dollar Listing San Francisco.

But even so, the deal almost fell through because the sellers wouldn’t include a washer and dryer in the sale.

Note: Just erase a zero (or two) from this example and you’ll see that the advice applies no matter the budget. Don’t let a small setback become a deal breaker.

4. Look at the big picture

You’ll be more likely to win a negotiation battle of wills if you’re not stuck on a specific number.

Sellers and buyers often enter a stalemate over minimal sums, says Chris Leavitt, a broker at Douglas Elliman who also stars on the TV show Million Dollar Listing Miami.

When that happens, Leavitt suggests that sellers consider the monthly carrying costs. “Do you really want to be on the market for potentially a few more months?”

For buyers, it’s about whether they really want to lose their potential new home over a small amount of money.

“Almost 100% of the time, both parties will meet in the middle,” says Leavitt.

5. Understand the difference between prequalified and preapproved

When lenders prequalify buyers, they simply estimate how much buyers might be able to borrow, and they base that figure on what buyers reveal. Being prequalified is not a guarantee that buyers will get a loan.

However, being preapproved means buyers have a loan in place that they’ll probably get if they act within a specified time.

Both buyers and sellers save time and negotiation skills when the buyer comes to the table with a preapproval letter from a lender.

6. Be realistic about short sales

Negotiations don’t work the same way when you’re dealing with a short sale. In this case, sellers are considered to be in dire straits financially, which means they can’t afford to make repairs or provide a repair credit, so that one’s off the table. These sellers also might have outstanding liens on the property that they want or need their buyer to pay.

As a buyer, you’re under no obligation to take whatever the seller dishes out. But if you still come out ahead after calculating costs of repairs and liens, then you might want to go for it.

7. Prepare to walk away

Sometimes people become unreasonable and even resort to bullying as a negotiation tactic.

“You can almost always work out an agreement, even when some part of the transaction has gone terribly sideways or down,” says Bruce Ailion, an Atlanta real estate agent.

But when someone is unwilling to engage in a civil way, Ailion says, it’s time to walk away. “Life is too short to deal with difficult people. Some transactions are just not meant to happen.”

More From Trulia:

MONEY Housing Market

This Is the Best State for First-Time Homebuyers

West Virginia capitol building
Thorney Lieberman—Getty Images West Virginia capitol building

According to GoBankingRates.com, the state where first-time home buyers have seen their lot improve most dramatically is...

When it comes to the nation’s hottest real estate markets, West Virginia usually doesn’t come to mind.

But for first-time home buyers it beats out bigger markets like California and Florida, at least according to banking Web site GoBankingRates.com—and it’s not just because of the majesty of its rolling mountains. The site chose New Hampshire number two and Rhode Island number three.

What makes these states stand out? Over the past decade, they’ve seen biggest growth in the number of first-time home buyers—without facing high foreclosure rates. A decade ago, just 33% of West Virginia home sales were to first-time buyers. In 2013, the latest date for which data are available, the rate had climbed to 57%. Meanwhile foreclosures have remained at 0.01%.

One factor in West Virginia’s favor: Median home prices are a very affordable $115,850. The state also boasts a program that provides up to 100% financing for first-time buyers who meet certain income requirements, GoBankingRates notes.

New Hampshire and Rhode Island saw even bigger jumps in first-time buyers—with the rate nearly doubling in both states—but both also had higher foreclosure rates of 0.05%.

Many Millennials and Gen Xers—demographics now in prime home-buying age—have been struggling to make their first purchase after seeing careers interrupted and savings decimated by the 2008-2009 recession. That dynamic has contributed to a lower homeownership rates than any time since the early 1990s, a recent Harvard study found.

West Virginia isn’t the state with the highest overall first-time homebuyer rate. That honor goes not to a state at all but to Washington, D.C., where 68% of buyers were first-timers, according to the Federal Housing Finance Agency data that GoBankingRates used.

Why not choose Washington as the best market for first time buyers? The FHFA study found that first-time home buyer rates typically fell when real estate prices rose. Washington’s real estate prices have been on a tear and median home prices now stand at more than half a million dollars. In other words, while the city may be full of aspiring first-time homebuyers, their task is getting harder, not easier.

MONEY Housing Market

Watch: This $40,000 Film Was Made Solely to Sell a House

film director and movie camera on cherry picker
Phil Hunt—Getty Images

Realtor video has bigger budget than some hit indie films.

Have you seen “9133 Oriole Way” yet? It’s a new independent film that was made in L.A. While only 4 minutes and 39 seconds long, it was put together with an impressive budget of more than $40,000, which surpasses how much it cost to make legendary full-length feature films like “Paranormal Activity” and “The Blair Witch Project.”

What really makes “9133 Oriole Way” stand out, however, is the reason it was created—not to entertain the masses, but to sell a home.

The address of the home in question is, of course 9133 Oriole Way, in West Hollywood, and the “lifestyle film” showing off the property was paid for by Williams & Williams, the real estate agency that specializes in “the most high-end properties from the Hollywood Hills to Malibu,” and works with “the cities [sic] biggest A-level actors, athletes, entertainment professionals and Fortune 100 executives.” (Apparently, they don’t work with a copy editor.)

“Regular marketing doesn’t work anymore. We’re appealing to a more sophisticated and savvy group of buyers,” Rayni Williams, of William & Williams, said to the Los Angeles Times, in explanation for why the agency made the film. “We’re taking it to a whole other level.”

According to the LA Times, Williams & Williams spent months finding a director, cast, and crew to make the promotional video. The result is something far beyond a lame slideshow or some kind of video version of the standard still photos showing off a home on a realtor website. While the entire video is set to music (“My House” by Flo Rida) and there is no dialogue, there is something of a plot, in which a handsome hotshot tears out of the home in a Corvette, leaving behind a gorgeous woman who decides to invite over four more gorgeous women to enjoy the property to its fullest. They’re seen lounging by the pool in skimpy bikinis and clinking glasses in the wine cellar in between slow crawling shots showing off the home’s massage room, fitness center, views of downtown, and other selling features.

Why would Williams & Williams fork over $40,000 to show the property off in such extravagant fashion? Well, the agency stands to take in over $1 million if and when it sells the 12,530-square-foot home, which is located in the hills near homes owned by Leonardo DiCaprio and Keanu Reeves and is listed at a cool $33 million. Watch on, and let the realtors know if you’re inspired enough to put in a bid.

MONEY home buying

7 Amazing Celebrity Homes You Can Buy Right Now

Open house on homes owned by J. Lo, Michael Jordan, and Paula Deen.

What’s your fancy: Berry Gordy’s historic “Motown Mansion” or Ted Turner’s private island off the South Carolina coast? Or perhaps the epic estates formerly owned by Jennifer Lopez, Michael Jordan, and Michael Jackson are more your speed? For the right price—a few million to upwards of $100 million—these homes, and the bragging rights that come along with them, can be yours.

Spring and summer is prime time for sales of all manner of homes, including those owned by the rich and famous. And celebrity homes on the market aren’t limited to southern California, but extend to areas such as Long Island, Chicago, Savannah, and even Detroit. Here are 10 of the hottest celebrity properties on the market right now.

  • Jennifer Lopez and Marc Anthony

    150629_REA_CelebHomes_LopezAnthony1
    Evan Joseph Images The Long Island home where Jennifer Lopez and Marc Anthony used to live is for sale for $9.495 million.

    No fewer than two mansions formerly owned by Jennifer Lopez and Marc Anthony are currently for sale. In addition to $17 million, nine-bedroom estate in the gated California community of Hidden Hills, the former couple’s home on Long Island’s Gold Coast is also on the market. Listed by Dolly Lenz Real Estate, the asking price is $9.495 million. That’s the price after a recent cut—not long ago, it was listed at $12 million.

  • Jennifer Lopez and Marc Anthony

    150629_REA_CelebHomes_LopezAnthony2
    Evan Joseph Images

    Lopez and Anthony lived in the home until announcing their separation in 2011. The compound, which consists of two homes and a total of 10 bedrooms on eight acres, is now listed under the ownership of Anthony, or rather his birth name, Marco Muniz. The main house is a 16-room red-brick mansion built in 1941. The guest cottage is a five-bedroom, 4,000-square-foot Colonial.

  • Jennifer Lopez and Marc Anthony

    150629_REA_CelebHomes_LopezAnthony3
    Evan Joseph Images Home of Jennifer Lopez and Marc Anthony, 3 Country Lane, Brookville, NY. Dolly Lenz Real Estate LLC

    Both Anthony and Lopez are world-famous entertainers, and yes, this place is great for entertaining—and performing. There is an oversized pool and pool pavilion, as well as a tennis court and vast manicured grounds. Inside the main house, there’s a movie theater and a professional-quality recording studio.

  • Michael Jordan

    150629_REA_CelebHomes_Jordan1
    Michael Jordan's Illinois home is currently on the market for $14.855 million.

    Appropriately, basketball legend Michael Jordan named his estate Legend Point. His Airness’s attempts to sell the 56,000-square-foot property in Highland Park, a wealthy suburb north of Chicago, are approaching legendary status as well. It was first listed for sale in 2012 for $29 million, which was reduced to $21 million about a year later. In late 2013, the plan called to put the 7.39-acre compound up for auction with a minimum bid of $13 million, but again it failed to sell. In the most recent listing, the estate’s asking price is $14.855 million, or about half of its initial price.

  • Michael Jordan

    150629_REA_CelebHomes_Jordan3
    Michael Jordan's compound was designed with all manner of players in mind.

    In the main residence, the living room and family room are both double height—fitting given that Jordan and many of his pals are oversized athletes. For that matter, many of the home’s features were designed with all manner of players in mind. The original doors from the Chicago Playboy Mansion mark the entrance to the “Gentleman’s Retreat” area, where there are card tables, a cigar room, and a wet bar. The home also boasts a wine cellar with space for 500+ bottles, a state-of-the-art fitness center, a movie theater, an indoor tennis court, and a golf putting green. Meanwhile, for the ladies, the estate includes a “full-service beauty salon.”

  • Michael Jordan

    150629_REA_CelebHomes_Jordan2

    What Jordan estate would be complete without a basketball court? The compound comes with an NBA-quality indoor basketball court with a custom sound system. The backboards are motorized, the flooring is cushioned hardwood, and the Jordan “Jumpman” logo is painted in the center of the court.

  • Paula Deen

    150629_REA_CelebHomes_Deen2
    Deborah Whitlaw Llewellyn Known as "Riverbend," the Georgia home of Paula Deen has an asking price of $12.5 million.

    Poised on the Wilmington River with 300 feet of water frontage, the estate known as Riverbend has been described by listing agent Seabolt Brokers as “the most significant offering in Savannah, Ga.” and “truly its own private resort.” Owned by Paula Deen, the TV chef and restaurateur who came under fire for racist comments in 2013, the 5.5-acre property features a 14,500-square-foot main home, two guest cottages, and a 10,000-square-foot barn with three bedrooms and an eight-car garage. Asking price: $12.5 million.

  • Paula Deen

    Deen/Groover Residence
    Deborah Whitlaw Llewellyn

    In total, the property has 28,000 square feet of living space, including—of course—a gourmet kitchen with commercial grade appliances in the main home. There is also an outdoor kitchen with a trio of grills, a smoker, and four outdoor refrigerators, plus a pool with an outdoor “dive-in theater” for watching movies under the stars.

  • Berry Gordy

    150629_REA_CelebHomes_Gordy1
    Deborah Smith—Keller Williams Realty The "Motown Mansion" in Detroit where Motown Records founder Berry Gordy lived for 35 years.

    Billed as the “Motown Mansion” by realtor Keller Williams, this 2.2-acre estate in Detroit features a 10-bedroom, 10,500-square-foot Italian Renaissance main residence, plus an adjoining 4,400-square-foot pool house. Motown Records founder Berry Gordy owned the property from 1967 until 2002, and the likes of Diana Ross, Stevie Wonder, and the Jackson 5 have been guests. It is listed at $1.295 million.

  • Berry Gordy

    150629_REA_CelebHomes_Gordy2
    G. Greg Wells Photography—Keller Williams Realty

    The property is said to have undergone a significant restoration over the past decade, with much of the original architecture and design preserved intact. The current owner, Detroit lawyer Cynthia Reaves, said that she acquired the property after writing a letter to Gordy pleading with him to sell her the home. “I told him about my love of the city of Detroit, my love of old homes, the fact that I had grown up in this neighborhood. And that I really felt that a home like this deserved to be part of the community,” Reaves told a local news program earlier this year. “I remember growing up across the street as a kid and saw all the wonderful parties that he would host here. The red carpet would go around the block. The stars would come out and walk around on the red carpet to the parties. And I remember seeing the Jackson 5 here trying to play golf in his backyard.”

  • Denise Richards

    150629_REA_CelebHomes_Richards1
    courtesy Douglas Elliman and Re/Max Olson & Associates Denise Richards' home in Hidden Hills, Calif., is listed at $7.749 million.

    Let’s cut right to the chase: This place has its own doggie hotel! Owned by Denise Richards, the actress and ex-wife of Charlie Sheen, this six-bedroom, 1.1-acre property in the Hidden Hills gated community in southern California features an onyx fireplace, cathedral ceilings, and two pools, including a grotto, waterfall, and “beach” entryway. But anyone who looks at the home will be talking about the pet hotel—a private kennel custom-made for allowing dogs to feel right at home. It’s being listed by The Altman Brothers for $7.749 million.

  • Denise Richards

    150629_REA_CelebHomes_Richards2
    courtesy Douglas Elliman and Re/Max Olson & Associates

    This home is made for dog lovers and foodies alike. In addition to the pet hotel, there is a wine tasting room with temperature-controlled walls for keeping bottles chilled at just the right degree. The kitchen is gourmet and fully state of the art, complete with a pizza oven and large windows overlooking lush manicured lawns and greenery.

  • Michael Jackson

    150629_REA_CelebHomes_Jackson1
    Jim Bartsch The estate once known as Michael Jackson's Neverland Ranch is on the market for $100 million.

    Currently dubbed the “Sycamore Valley Ranch,” this epic 2,700-acre estate in Los Olivos, Calif., 40 miles outside Santa Barbara, is world famous as the “Neverland Ranch” long owned by Michael Jackson. The asking price is a cool $100 million, according to Hilton & Hyland and Sotheby’s, which share a joint listing of the property. The main residence is a 12,500-square-foot building in French-Normandy style, and there are a total of 22 buildings on the grounds, including three guest homes and a 5,500-square-foot movie theater with a stage.

  • Michael Jackson

    150629_REA_CelebHomes_Jackson3
    Jim Bartsch

    Jackson sold the property in 2008, when he was in dire financial circumstances. When he lived there, Neverland boasted amusement park rides and a zoo’s worth of animals, including giraffes, orangutans, baboons, and an elephant. The animals and rides are gone now, though the private railroad tracks and train station that Jackson used to entertain guests remain.

  • Michael Jackson

    150629_REA_CelebHomes_Jackson2
    Jim Bartsch

    Jackson purchased the estate in 1987, and over the years it was used for a wide range of events, including Elizabeth Taylor’s 1991 wedding (her seventh), the World’s Children Congress, and numerous fundraising gatherings. And yes, this is where Jackson allegedly abused children: When he was facing child molestation charges in the mid-’00s, prosecutors said Jackson used Neverland as a lure for children.

  • Ted Turner

    150629_REA_CelebHomes_Turner1
    courtesy Plantaion Services Inc. The main residence on St. Phillips Island, Ted Turner's private retreat off the coast of South Carolina.

    For a mere $23.777 million, you can be the owner of an entire private island—specifically, St. Phillips Island, a 4,680-acre retreat outside of historic Beaufort, S.C., reached only by boat. The listing from realty company Plantation Services states that media mogul Ted Turner purchased the island—now a Registered Natural Landmark—in 1979. The property comes with two residences, and an agreement with The Nature Conservancy stipulates that the owner may add up to 10 more residences on the island, which has its own water and power supply.

  • Ted Turner

    150629_REA_CelebHomes_Turner2
    courtesy Plantaion Services Inc.

    “The Turner family and their friends have enjoyed sailing, fishing and entertaining here for thirty-five years,” the listing description notes of the island, which is a short sail away from Hilton Head. Among the 4,680 acres that fall into the domain of St. Phillips Island, more than 1,000 acres are categorized as “Upland,” or firm ground, and 70 acres are sandy beaches.

MONEY buying a home

Why It’s a Good Thing That Cash Buyers Are Exiting the Housing Market

475152285
Nils Hendrik Mueller—Getty Images

Cash buyers skew the market by soaking up inventory that could be purchased by a young family looking for a first-time home purchase.

In many parts of the country, housing prices gave returned to pre-recession levels. That’s good news for sellers, bad news for buyers. But buried within the latest housing data is some good news for everyone — everyone on Main Street, anyway.

All-cash buyers seem to be finally retreating. The percent of homes purchased by all-cash buyers share in May was close to its long-term average going back to January 2000 of 24.8%, and well below its recent peak of 42.2% in February 2011, according to data released Thursday by RealtyTrac. It’s one sign that the housing market is on the road back to a normal, “how do we find a place to live?” market, and away from the “how do I make a quick buck?” market.

What’s an all-cash buyer? Someone — or something — with a lot of money. All-cash buyers don’t need mortgages, they just show up with a check and buy a home. Generally, they are big investors, like hedge funds and foreign entities, who have no intention of living in the homes. They skew the market by soaking up inventory that could be purchased by a young family looking for a first-time home purchase. They also make such buyers look bad. If you were a seller and had two offers — one all-cash, and one that still required financing to be arranged — which would you choose?

“As housing transitions from an investor-driven, cash-is-king market to one more dependent on traditional buyers, sales volume has been increasing over the last few months and is on track in 2015 to hit the highest level we’ve seen since 2006,” said RealtyTrac vice president Daren Blomquist.

The out-of-whack housing market has been suffering from a record level of all-cash buyers for the past several years – well above historical norms, according to mortgage expert Logan Mohtashami. He says the retreat of cash buyers is positive development.

“This is a positive as total sales are rising with less cash buyers as a part of the market place…Less cash means more traditional buyers in the system, which means the supply and demand balance is more correlated to Main Street economics,” Mohtashami said. “(This year) is trending between 24%-27% which is still very high, but this is the first time it’s under 30% in every report.”

Of course, the shrinking number of cash buyers doesn’t mean prices are going down. In Manhattan, for example, the average sales price for an apartment just hit a record high — $1.87 million. And it’s not just New York. Home prices in Dallas, Denver, and San Francisco are positively bubble-icious, rising about 10% last year, soaring past pre-recession levels.

But with more first-time homebuyers and fewer inventory, at least the dynamics of home buying might change a bit.

“The competition in the market place is … different,” said Craig King, COO at Chase International brokerage, covering the Lake Tahoe and Reno, Nevada, markets. “While inventory is tight many investors have dropped out of the market and cash deals are not as prevalent as they were. Even in multi-offer situations much has been equalized. This is great news for first-time buyers.“

If you’re looking to buy a home this year, make sure you know how much home you can afford (here’s a calculator that can help). And be sure to check your credit, since improving your credit scores can save you thousands of dollars in interest over the life of your mortgage.

More From Credit.com:

MONEY buying a home

Should You Ever Pay Cash for a Home?

150629_REA_CashforHouse
Laboko—Shutterstock

Consider what paying in cash will do to your savings — emergency, retirement and otherwise — in the short term.

While some of us may be struggling just to afford a down payment, there are people out there who are paying for their homes in full in cash. Finding a great property and forgoing all the bank paperwork and loan repayments may seem like a dream, but it can, in fact, be a mixed blessing. So, if you are looking to buy a home and could afford to pay all cash for it, should you?

Running the Numbers

A great place to start in this process is figuring out how much money you would save buying a home in an all-cash payout versus with time-based loan payments. Compare the sticker price to the eventual price tag of your home if paid for with a 15- or 30-year fixed mortgage with a down payment of around 20%. You will save money on interest, but it’s a good idea to factor in the loss of the mortgage interest deduction when it comes to tax time. Also, consider what paying in cash will do to your savings — emergency, retirement and otherwise — in the short term.

Pros

If you truly have the money available immediately and it won’t put you in jeopardy of going into debt if an emergency were to come up, you will most likely save money by not paying interest on a loan. You will also avoid all of the paperwork that comes with securing a loan, pesky closing costs and the often-frustrating loan process.

Your credit history also will not come into play, which may be beneficial if you have a shaky credit past or have run into trouble before while still having considerable savings. You will also have available equity in your home that you could likely tap in case you hit tough financial times. Furthermore, you can only lose the amount of money you have put in because you are not leveraged, meaning you do not need to get as concerned about market fluctuations.

Another benefit is mostly psychological — you actually own your house, giving you a sense of security and pride. Probably most importantly, you are a very attractive buyer to motivated sellers, giving you an edge over other buyers. The deal will be simpler and faster for both sides and buying in cash may even put you in a position you to get a better deal. After all, time is money.

Cons

Paying cash for your home likely means most of your savings or at least a lot of your money will be tied in one asset, leaving less money to invest in other, diversified assets. Also, real estate has a historically lower return on investment than stocks or bonds, meaning you could be losing out overall if other investments would have outperformed the interest on a mortgage.

Additionally, you are sacrificing liquidity, so it’s probably only a good idea to buy a house with cash only if you can afford it without emptying your emergency fund. A home can take months to sell, and borrowing against your home’s equity brings fees and borrowing limits into the equation. You further lose the financial leverage a mortgage provides because your payment is locked in and hopefully received a favorable interest rate. Lastly, you will not qualify for the tax deductions mortgage payers receive, which often total over $10,000 when itemized.

How you pay for your home is a very personal decision and paying in all cash will likely work for some people but not for others. This generally makes sense if the home’s price does not subtract a significant portion of your liquid assets and/or the interest rate you would pay on a mortgage is higher than what you could earn on other investments. It’s important to properly assess your financial situation and long-term investment strategies, the drawbacks as well as the benefits.

Read next: How Much Rent Can You Afford?

More From Credit.com:

Your browser is out of date. Please update your browser at http://update.microsoft.com