Now it’s renters’ turn to gloat

The housing slump has been painful for millions of people who work in real estate or recently bought a house.

For Patrick Killelea, however, this year has been one long victory lap. Killelea, a 41-year-old software engineer, has long preached that it makes more economic sense to rent than buy homes. He recalls shouting “Wow!” when he heard about September’s 9.7 percent drop in prices of new homes.

“I didn’t want to gloat,” he says. “But then again, maybe I did.”

For years, Americans who refused to buy real estate at what they considered excessive prices were ribbed for failing to profit from one of the greatest booms in history. “Are You Missing the Real Estate Boom?” needled the title of a 2005 book by David Lereah, chief economist of the National Association of Realtors.

Now, with the housing market in a slump, renters who sat out the boom are finally getting some satisfaction.

Dean Baker, an economist, believes that the slump validates his decision to sell a two-bedroom condo in Washington’s Adams Morgan neighborhood two years ago. Mr. Baker says he received $450,000 for the unit, which he had bought for just $160,000 in 1997. Since unloading the condo, he and his wife, Helene Jorgensen, also an economist, have been renting an apartment nearby for about $2,300 a month.

Baker concedes that he could have made an even bigger profit on the condo had he held it for another year or so but says it’s impossible to time the market perfectly. While some economists argue that the housing slump is nearly over, Baker insists, “We’re just at the beginning of it.”

Of course, as even many hard-core renters acknowledge, homeownership has some big advantages, including tax deductions on mortgage interest, the possibility of gaining value over the long term and the security of knowing you won’t be evicted by a capricious landlord. But some of today’s renters say it has been a bad time to buy in the past few years, when speculators helped drive up prices at an unusually rapid clip.

David Jackson, a 26-year-old information-technology specialist, has been railing against the housing industry for two years — ever since he made a vain attempt to find an affordable town house or condo in Silver Spring, Md. Unable to understand why prices were so high, he began researching the real-estate market and, he says, “came to the conclusion that there was a massive housing bubble.” So Jackson decided to remain a renter. He pays $645 a month for part of a townhouse.

Now that the housing market is slumping, “I feel vindicated,” Jackson says. “But I’m not looking forward to the coming recession.” He believes that the housing slowdown and the effects of “a mountain of debt” on consumers will pull the entire economy into a slump.

Among all the defiant renters, few roar louder than Killelea, who pays $2,350 a month to rent a snug, two-bedroom craftsman house near Stanford University in Menlo Park, Calif. He figures owning would cost him $7,000 a month in mortgage payments and.

Most mornings, he sits at a small pine table just off his kitchen and scans e-mails from acquaintances for any bad news that fits his worldview. Before he heads off to work at a bank, he posts the dozen bleakest stories to his Web site — patrick.net/housing/crash.html — under the permanent headline, “U.S. Housing Crash Continues.”