Pastors and teachers certainly may buy houses, but should they? A hundred years ago, it was common for them to live in congregation-provided housing. Then people got the notion that it was unfair for pastors and teachers to miss out on the housing boom. After all, where would they live after retirement if housing rose rapidly in price? And, they should have the opportunity to enjoy the blessings of housing appreciation just like everyone else, to build up an equity through housing ownership. There were certainly other reasons that both congregations and church workers favored selling church-owned houses and permitting the workers to live in the house of their choosing.
But, is the decision to purchase a house a good one? For every worker who has told me he made a killing, at least seven have told me about losses, sad stories of major losses, paying mortgage payments for years on unsold houses. People are turning down calls because they cannot afford to move. If you were unfortunate enough to buy your house in May 2006 at the peak and need to sell it today, you are facing (on average) a 30% decline in value plus perhaps 10% more in house preparation and closing costs, easily erasing your 20% downpayment and more. The Case-Shiller Housing Index shows that since 1890, housing prices have increased less than 1% per year on average after excluding inflation. Plus, the owners are responsible for repairs which may be substantial. On average, you would be much better off having your money in the stock market or a CD than to buy a house.
Buying a house with a 20% downpayment is a highly leveraged transaction-- it can increase 5 to 1 and decrease 5 to 1. Most church workers are pretty conservative and you would rarely find them betting on margin, options and "puts and calls" in the stock market, yet they bet just as wildly on houses! Houses are also very illiquid. If you need your money to move or to pay for unexpected expenses, you may have to wait a long time. But, perhaps the best reason not to buy and to consider renting is that you may feel called by the Lord to accept a call in another town. Do you really want a house to color your decision?
But, is the decision to purchase a house a good one? For every worker who has told me he made a killing, at least seven have told me about losses, sad stories of major losses, paying mortgage payments for years on unsold houses. People are turning down calls because they cannot afford to move. If you were unfortunate enough to buy your house in May 2006 at the peak and need to sell it today, you are facing (on average) a 30% decline in value plus perhaps 10% more in house preparation and closing costs, easily erasing your 20% downpayment and more. The Case-Shiller Housing Index shows that since 1890, housing prices have increased less than 1% per year on average after excluding inflation. Plus, the owners are responsible for repairs which may be substantial. On average, you would be much better off having your money in the stock market or a CD than to buy a house.
Buying a house with a 20% downpayment is a highly leveraged transaction-- it can increase 5 to 1 and decrease 5 to 1. Most church workers are pretty conservative and you would rarely find them betting on margin, options and "puts and calls" in the stock market, yet they bet just as wildly on houses! Houses are also very illiquid. If you need your money to move or to pay for unexpected expenses, you may have to wait a long time. But, perhaps the best reason not to buy and to consider renting is that you may feel called by the Lord to accept a call in another town. Do you really want a house to color your decision?
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In my new Call, I took 6 months to purchase a home and now that I have, my family and I can have this sense of belonging because the members are not asking, "So when are you going to buy a house?". All-in-all, you have to do what the Lord is leading you to do and as for me and my household, we will buy a house...LOL!
Thanks for your post. This same "re-think" about purchasing a home is taking place in our society at large. During the real estate explosion of the late 90s and early 2000s, everyone wanted to buy a home and many congregations found their parsonages sitting empty. I suppose many congregations also sold their parsonages during these years since the houses were sitting empty and the price they could receive for them increased dramatically. But as it happened in the 70s and 80s, the desireability of a parsonage increases and decreases with the economy and the real estate market. I think your description of the current situation is accurate, Ray. There are church workers who feel the need to move, but seriously wonder if they can afford to move. Can they sell their house? Can they afford to seel their house for what they will receive for it? These same questions are haunting those who are contemplating seminary enrollment as second career students.
Again, thanks for your post!
In our situation it is impossible for us to buy a house. Any equity we might think we'd be building we would lose on interest and repairs for the first 5 years at least. Being a pastor, I have neither the time nor the skills to take care of a home.
Perhaps if more pastors would rent instead of buy congregations would begin to see the need again to build parsonages.
Thanks for your wise advice.
As a Lutheran school teacher, I never quite made it to the point of buying a house--always renting. Now I'm a pastor, living in a parsonage, *not* building up equity. (My dual parish doesn't provide "equity-equity" of any sort--just the Church's Plan.) I would very much like to be in a position to buy one, for retirement's sake.
Markets come and go. You do what you can do, make the wisest choices given your circumstances, and then remember Who is really taking care of your *every* need, anyway. "How shall He not, along with Him, freely give us all things?" Life under the cross, y'know.
I enjoy owning my own home where we can do what WE want without worrying about what the "owners" (members) think. But I agree that ownership can make us slaves to our own house. Sometimes we may just have to put our words into practice: "Trust in the Lord; He will take care of you."
We're renting now... and darn happy about it, too!
When you consider the tax benefits many pastors enjoy, house ownership makes good sense for many...and keeps the wives much happier too.
Now, instead of living in isolation near a cornfield, we live in the community. Not just living in it, but being a part of it. The congregation is glad to be out of the housing market, they no longer have to be concerned about maintenance. Everyone is happy about the situation, including, but especially my wife.
This raises another important issue. For many second career people such as myself, you have to be responsible in providing for your spouse. She has made sacrifices as well. As a husband, I have a duty to provide for her. What would happen to her, and where would she live if something should happen to me during my ministry? Even if nothing should happen, do I not have some responsibility to provide for her, including and especially a home, after retirement? There may not be enough equity built up during one's ministry to make a down payment. Some have served a long time to build up this equity, and some have not. Every case is different. I know owning my own home works not only for me but for my congregation as well. They know I'm in here for the long haul. I am 64 years old now, and probably won't retire for another four years, Lord willing.
And let's be sure we understand that "the time needed to maintain a home" is not in opposition to "time to serve others." Good stewardship of our homes--whether a parsonage or a rental or an "owned" home--helps our neighbor "improve and protect his property and business" (Sm.Cat.).
1. I didn't have to worry about finding housing, securing a mortgage with no real work history which would have ensured a high interest rate.
2. If there are any problems with the house I go to the landlord (the congregation) and they are responsible for fixing the problem. The financial and stress burden is not on me.
3. As a landlord/tenant arrangement (which is what a parsonage is) the congregation has legal responsibilities to repair problems etc. They also are required (at least in my state of NJ) to allow for painting of walls and hanging of pictures.
4. If i take a new call, I don't have to worry about canceling a lease or selling a house
5. I don't have to pay property taxes and in NJ that's a big deal where the average person pays over $7000 in property taxes per year. And then add in insurance costs.
6. I don't pay interest to anyone. No debt should be our second priority as pastors when it comes to financial things (the first is the tithe to our congregation). The average person with a mortgage will end up paying the double the purchase price just for the home. take out $300,000 mortgage and pay $300,000 in interest
7. Even if i stay in this call until i retire, I'll never see any of that money that I have "invested" in the house. In the end it will just go to my estate.
8. Now that brings up the value of leaving something for loved ones after you die - they now have to sell your property and deal with that issue. Your house might not sell. For example, I have a member whose house has been on the market for 5 years after she passed away - and the family is stuck with the burden of paying those high taxes and constant repairs. When I die I don't want to leave that burden on anyone. Also, I don't expect any financial gain when my parents die. They raised me, and taught me to be a hard worker, I can care for myself. I buy insurance to care for my family if i die. A house shouldn't be a "reward" for adult children. At least in my opinion.
10. We gave up lots of control when we decided to go to the seminary and become pastors. We didn't decide what our first call was going to be. We don't (or we shouldn't) go out and solicit new calls to richer, fancier churches.
11. Lastly, if you are having real financial difficulties (like they are paying you below district scale) talk with your congregation show them from God's Word that a worker is worth his due. You are God's servant to them. And if you think that owning your own home will keep the congregants away what keeps them from knowing your address and stopping by there too. They did it to my dad (he is a pastor too). Just let them know that they can't just come in. Change the locks if you need to. They need to know that it is your private residence that you are in fact renting from them. They aren't giving it to you - you work hard for that home.
Just my thoughts and here are a few links to some insightful resources about home ownership
Peace
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2. First Call, rental provided by the congregation. Few years later qualified for low income housing. With generous member's loan got a new house. In a few years had equity, paid off loan.
3. Second call, former pastor's widow kicked out of parsonage when her husband died. She died in poverty when we arrived. My wife said 'use equity, buy house as back-up plan'. Bought new house, but lived in the parsonage for 30 years. Renters paid for new house; now paid off. (housing boom in CA made it all possible).
4. Raised 5 kids on a shoe-string budget, but now flush. Parents died, inherited millions. Challenge to give it away, but rewarding.
5. Live on little; be frugal, when blessed be generous. Either way God is good.