The Homeownership Society Was a Mistake
theatlantic.com
theatlantic.com
Nope, stopped reading there. The whole thing is inane. Most people don't get an option of not paying anyone anything for their housing at all. Only extremely well off landlords and some retirees with fully paid off mortgages do.
Someone owns the building where you live. Either that person is you, and you are paying off your own debt; or that person is someone else, and you are paying off theirs.
This article argues at great length for you to let someone else pocket all of that wealth rather than retaining some of it yourself.
If you pay mortgage, there is hope that one day you will have paid it off and no longer have to. If you pay rent, only your landlord profits.
Sure, sometimes renting makes more sense than owning outright. For short term needs, changing needs, etc. Or if renting is cheaper than a mortgage
But building equity is important and home ownership is one way of doing that
This argument only makes sense if the (monthly) rent payments are more than mortgage payments + maintenance costs.
In most cases, that's not true.
Are you claiming that most landlords operate at a loss? I don't buy that.
no, landlords do not willingly operate at a loss. in a really bad market (housing glut) they may be forced to. that's not the situation right now, at least in highly populated areas.
rents are usually going to be at least 20-30% higher than mortgage + expenses, or else the landlords will start selling or go bankrupt.
however, that's the mortgage payment and interest rate from the time it was bought, not necessarily today. so if the landlord bought that investment property 5 years ago, his costs are probably less than 1/2 of what it would cost you today. even if the market rent goes lower than that, he can still be profitable. so, right now, temporarily, it can be slightly cheaper month-to-month to rent in a lot of markets in the us.
the fact that's what the markets are doing says some things about the current and future home sale prices.
For renting to be better value than buying, the rent has to be cheaper than just the interest part of the mortgage payment plus whatever portion of the maintenance costs is for things a landlord could be persuaded to cover, a somewhat lower bar than the entire payment.
Being able to actually afford the whole amount remains a concern, of course. Where I live obtaining mortgages for any significant portion of the cost of a property is generally hard for people on anything close to an average income or below, and so landlords can get away with charging rents that are literally higher than the total mortgage payment would be. Even though the tenant can demonstrably afford the repayments - they are literally paying a landlord more every month! - the bank will not lend more than a fixed multiple of their salary and so they cannot buy.
I understand this is something of a local issue, though.
Yep, this is forgotten in many discussions comparing rent and mortgage. Only the interest portion of your mortgage matters for the sake of comparing expenses. The principal portion is money going from one of your pockets to the other and does not represent an expense.
PITI: Principle+Interest+Taxes+Insurance. Out of which, ITI is straight up cost. P+I is a constant through the life of the loan. At the beginning P is very small in relation to I and increases over time.
So for the first 5 years or so, P is so small that it essentially is a wash with your cost of lending yourself the money. After that, I think you can take some small credit for principle repayment. Adding maintenance and assuming 5-10% vacancy, it's normal to have rents be 120%-130% of the equivalent PITI when things are stable - I don't think that's just a local issue - that's healthy.
This covers how much rents must be to be not a loss for the landlord. But if you comparing rents to purchase, you also have the same small effect happening for the purchasers potential mortgage too.
People have noted the tax benefits of deducting your interest and local taxs (I+T), but that may have diminished a little due to much higher standard deductions since 2017.
I have not noticed people pointing out that another benefit is that any "investment" growth, unearned equity increase when your house appreciates, is tax free on your primary residence. That can be substantial.
While it's true that mortgages have a debt-to-income ratio limit (it's not income to loan ratio), so do landlords, except the very worst slumlords who don't care.
Why would people pay a 20-50% premium to rent? Good and bad reasons:
- short term, no commitment, might move, etc.
- bad time to buy right now
- bad credit
- can't get together the sizeable down payment
- scared
- underestimate the financial benefits
Several of those reasons are rational even to pay a premium. But of lot if it is irrational. TFA didn't adequately address any of the "good" reasons not to buy a house and mangled the rest.
Here, it literally is; typically 4.5x the annual household income is the most the average bank will lend you. There is also a separate affordability test which works the way you describe. https://www.google.com/search?q=uk+mortgage+to+salary+ratio
We have a "front-end" ~28% and "back-end" ~36% debt to income (DTI) limits (typically). Front-end is ratio of mortgage loan to income and back-end is ratio of all debt to income.
The interest rate can wildly change the size of loan you can get for a given income because of this method (as we saw prior to last year).
If you had a fixed ratio, when interest rates go up a 4.5x mortgage would be a lot less affordable. I can't imagine paying a 8% loan on $450,000 with $100,000 income. That's be $4000 a month, front-end rate of ~48%. Ouch! Guaranteed foreclosure.
Neither system is perfect, I still don't like that non-debt expenses are not counted and it should be net income after taxes.
As a landlord, therefore, you will not be loaned the money unless there is profit to be made on the rent; we don't have to speculate - we know absolutely for certain that (rent-maintenance) is enough to pay off all the interest and a little principal each month, otherwise the bank would not have lent the landlord the money.
I am rather less familiar with the US buy-to-rent mortgage market, but I understand there are similar eligibility criteria involved there as well.
> In most cases, that's not true.
In most cases, that's not true initially.
Over time, rents rise substantially but mortgages are fixed and can go lower by refinancing.
When I bought a house, the monthly cost was a bit over 200% of my rent at the time (of a roughly similar-sized rental unit). Yes it was painful in that first year.
It only took ~3 years for the rents in the area to become similar to my then already lowered mortgage via refinance.
Fast forward a couple decades and my housing costs are ~20% of rental rates in the area.
By the time I retire the mortgage will be long gone. It is heartbreaking to watch older people on fixed income having to deal with ever-rising rents.
This varies by country. In my corner of the EU, morgages are flexible rate (following an index such as EURIBOR), sometimes with a 5-year fixed rate option (for a premium).
we never really own our real estate (and i can't just leave and take it with me)
Do you like having drinkable water in your house and not having piles of trash on the sidewalks (Or having walkable sidewalks at all)? Do you like talking to educated neighbors? Yeah, those taxes pay for that.
If you want to get as close to "owning your own land", move 100 miles out of a metropolitan area. Just don't complain about having no roads, no water, internet, electricity or access to the hospital when you need it most.
These are poor examples. Privately-owned water systems and trash collection are both very common, at least in the United States. Where I live now, both are city services. Where I lived immediately before, both were private.
> move 100 miles out of a metropolitan area. Just don't complain about having no roads, no water, internet, electricity or access to the hospital when you need it most.
Most houses in rural areas of the United States have perfectly adequate roads, have a private well, and get their electricity from a rural electric cooperative. Internet was tough, but Starlink has mostly solved that.
> Do you like having drinkable water in your house and not having piles of trash on the sidewalks
At least here, taxes don't pay for either of those things.
Water is billed by the water agency and trash collection is a private company with their own billing.
School teachers make nowhere near that, even post retirement, with a pension.
The state with the highest salary band for primary education is Maryland at $99500 at 90p.
Most states cap out below $132k, and that's after 20 years of experience and several Master's degrees in Education (not free).
Admins make more than that, but not much more.
Private school educators are paid by tuition and do not receive property tax revenue afaik.
Police officers in many cities make more than this (also funded by prop taxes).
Also, a thought experiment: what if it _were_ possible for teachers to retire as multi-millionaires? How would this impact the quality of education our children receive? How would this impact our future societies?
You mention the cost of their education but you’re no doubt aware of the Federal Schoolteacher Student Loan Forgiveness Program.
Rather than me search for your myth, perhaps you can show me an example?
(I know plenty of people with land more than 100 miles outside a metropolitan area, and they do have roads, electricity, and schools. Water is from a well, and the govt does not supply internet. Some places have a county hospital, some don't)
This ignores the opportunity cost of the delta between equity component of the house’s financing, mortgage payments, and rent.
The “forced savings” argument is nonsense. If you’re renting you are simply building equity and “savings” for someone else. Housing cost is a lot of monthly money going out the door to never see a penny of it again. People do dumb things like buy too much house, but it’s very hard to make a financially logical argument against sensible home ownership. Even in places were housing is super expensive it’s common for those that played their cards right to simply cash out later in life, buy some place in a less expensive part of the country and pocket all the equity.
In the US the whole tax system is also rigged massively in favor of home ownership. If you own you’re paying mortgage interest and real estate taxes and both are tax deductible. If you rent you are almost certainly paying both of these (your landlord includes it in the rent) and get no tax benefits.
The only realistic argument for renting is if you’re only living somewhere for a few years and the fixed costs of buying/selling outweighs the financial benefits of ownership.
No it isn't. Ben Felix has a great video talking about this:
https://m.youtube.com/watch?v=q9Golcxjpi8
We can argue which is better in a specific situation, but there's definitely an argument for renting other than "people buy too big".
I also own a house. I hate the maintenance part :p
I don't hate maintenance as I grew up working around the house with my dad. But I absolutely will not do lawn care work, ehehhe!
Which he regrets:
Side note - As I understand it, you cannot deduct either of those if you take the common standard deduction. In high cost of living places I am told that these deductions do outweigh the standard deduction.
Lack of homeownership is not what's making the US poor lose money. Lack of income is what's causing lack of homeownership. Lack of income is caused by society and government sabotaging these groups.
I know there's also a cost-benefit analysis involved surrounding all the various fees and taxes.
The biggest "what-if" risk is probably liquidity.
But in my time on various zoning boards and appeals boards more often than not I am the dissenter when someone says “neighbor on their own land doing something legal will lower my prop value.”
When I remind them “with investment comes risk” I am often looked at, by my own peers even, like I just said something crazy.
Owning your home is owning a home and I think we need to focus on that idea more.
Landlords can also deduct their interest expenses and so they benefit from leverage too (meaning they don't want to build up equity).
In a reasonably efficient market, this means that the equivalent cost of homeownership would be higher than rent, to offset these things (the rate at which you're paying down the principal, and the deductability of interest rate expenses). This is obviously a very simplified argument, and there's a lot of other factors going into this.
Back in 2013 I was renting an apartment for $1600/month, but my dad made me do the math and I ended up buying a condo about 10 minutes walk away, larger and far higher quality everything and the mortgage was only around $800/month. Even with the monthly assessment fee (for the management company to handle the property and facilities) it was lower than what I was renting for. Just had to get over the down-payment hump.
"Tax deductible" != "Free"
A simple counter example: if you were 400k in debt on a 500k house, COVID-relief money printing caused 20% inflation meaning your home is now worth 600k and you still have 400k debt to pay off but with 20% cheaper money. Equivalently 20% (80k) of your mortgage was paid off for free / inflated away. If you rented the 80k would go to your landlord and your rent would go up by 20% - you'd need to seek salary increase to get back to being even.
Until every financial crisis ends up being fixed by freshly printed money By all means, if you can shoulder it, you should ALWAYS have at least one morgage.
If most people rent, then most housing is now investment - just not for the people living in it. If the goal is for housing to be treated as something other than investment, making more people rent instead of buy achieves the exact opposite.
You can get LOC, rent out rooms, build an ADU, split the house, etc
A lot of options available for property owners
No it doesn’t. It means you can take on an additional $100k of debt this year. HELOCs are not free money, no matter how much the banks want to convince you this is the case.
Taxing it just makes renting more expensive, high interest rates makes even less people be able to afford one in the first place, and you still need some rental properties as many people don't want to immediately get the forever home.
Regulating renting would make many people bitch and whine about their freedoms to do what they want with thing they own (and, well, rightly so) so there is not that much options left. Cities could build then rent housing (with maybe option to buy out at discount if you lived there for few years) but good luck trying to beat private investors without some heavy legislation on it.
Only assuming they can’t downsize or move.
I know plenty of people that bought in a flash suburb, or a family sized home then kids have left home, so they sell up and go cheaper while retaining a lot of equity from the property valuation growth.
Also when people don’t need to work (usually retirement), it is very common for people to leave expensive urban areas and move to cheaper and nicer digs in semi-rural areas. This works especially well if you move countries or return to your birth country.
You are also ignoring the worse situation where a married couple divorce and now need two homes: halving total equity is financially difficult for most people (especially in later decades which leaves little time to catch up again).
1. Interest rates are, at least in Germany, rather high if you didn't manage to save or inherit some starting capital somehow - so for most people the best course of action is probably to live for rent at first and put aside what they can to get a decent deal. Also bearing in mind that interest might jump up after the initial contract period.
2. At least for me, it was hard not to overinvest into my own real estate. "Just 10% more for these fancy light switches instead of the plain ones". "Just double for these awesome windows" and so on. The landlords I had in the past usually had the cheapest, most plain stuff and it never bothered me, but somehow with my own property I have this voice telling me to put in just a little more. Thing is: Houses can be changed to quite a degree after moving in, much like software.
3. Old houses are usually the cheap choice. But they are also, in my experience, always in worse condition than you (and even experts) think. So it's good to prepare for having to pay rent _and_ the credit for 3-12 months - as well as have some items on your fix up list that you could sacrifice in case you learn about something more pressing to fix.
The housing market were I live is solid enough that I broke even after about 3 years despite these traps, but I have a feeling I got lucky and it could have gone bad just as likely.
While most people don’t particularly care about appreciation, nobody wants their housing value to fall because it could make them underwater on their mortgage, which in turn makes it impossible to move without paying out-of-pocket the delta between their house’s value and the remaining principal on the loan, which in the last housing crash was often hundreds of thousands of dollars.
At least in the US, where mortgage rates are fixed across the entirety of a 30 year loan, people buy houses mainly as a hedge against inflation, since your mortgage payment is constant across the entirety of the loan.
...surely there's also the part where, at the end of the 30 years, you have a house, but at the end of 30 years of renting you have nothing.
I say this as a homeowner, yeah the home equity is great but it’s not a pro without cons. Sure feels like I’m working for that equity while managing this house.
Renting is most effective when you're unstable - like moving around a lot, or are renting places that would otherwise require a lot of upkeep without a commensurately low purchase price.
How is it possible to conclude that without knowing relative cost of renting vs. owning? Where I live, mortgage payment would be 2x-3x the rent for the comparable apartment.
I'm not saying that's a wrong decision, I'm saying that it's impossible to call it "better" without a lot of context.
As a part time real estate investor and someone that started owning when I graduated college its a cheat code to being independently wealthy. How else can one get a bank to leverage 80% of the risk but if I sell they don't get a any of the equity gains.
I also can 1031 gains into more rentals and not pay tax on the sale not to mention depreciation.
I have my kids college paid for and retirement setup thanks to realestate. Not to mention my kids will be given at least 6 units to either collect rent or sell.
Sure don't view your home as an investment but to say the rich dont see the importance of real estate is nuts. While I think homes should be affordable to everyone and housing shouldn't be seen as an investment its the world we live in and I like many many other people before me used to set themselves up for long term success.
The bar chart is listing percentages of wealth in each asset. Wealthy invest a lower % of their wealth into toilet paper. So in the bar chart it would look like the wealthy don't wipe themselves at all.
Wow that’s quite the blanket statement to make - and no, it should not generally be considered consumption.
The article delves into the “rent vs buy” thing and it’s not as black and white as “let’s be against home ownership”. One has to do the math and decide what makes sense.
Also, it’s very US-centric :) the “everything is consumable” mentality permeates every pore of this article.
Well, no it isn't hence why it is viewed as an investment!
Also - I’m not going to give specifics / anecdata but where I live, house values have gone up almost 100% in 5 years. I fail to see how that constitutes a “depreciating asset”.
Renting is fine in many scenarios, but homeownership can bring a lot of stability to life. Sure it's not for every single person out there, but if you plan to stay put for at least a few years and can afford it, I say go for it.
I think that dollar-for-dollar cost comparisons with renting can only go so far as it's not easy to measure the value of the aforementioned stability (and neither is the lost flexibility of renting).
I've been renting for 3 years, and I want my own place to do whatever I want regarding building around/inside it, not having to deal with the owner, things that break down and don't certainly belong to me, not having to deal with arbitrary rent raises (and the huge stress of having to move out somewhere else) to etc. etc.
It's not just an investment thing, it's about having something of your own instead of living in someone else's property and abiding to its desires and (rightfully so) conditions.
“”” This is a key, uncomfortable point: Home values, which purportedly built the middle class, are predicated not on sweat equity or hard work but on luck. Home values are mostly about the value of land, not the structure itself, and the value of the land is largely driven by labor markets. Is someone who bought a home in San Francisco in 1978 smarter or more hardworking than someone trying to do so 50 years later? More important, is this kind of random luck, which compounds over time, the best way to organize society? The obvious answer to both of these questions is no.
“””
The first questions answer is “so what,” and the other question is “why not.” Investments aren’t meant to be egalitarian, fair, or reward the morality of labor. They reward people who allocate capital in a way that happens to increase in value over time. Will someone investing in SF real estate benefit as much as someone who did 50 years ago? Definitely they won’t in the next year if that’s their point. It took their entire lifetime to realize that investment return. They’re likely dead now. In 50 years will it be as good an investment? Who knows. If you knew for sure one way or the other, which they imply they do, you can in turn use that knowledge to improve your investment returns. But only, apparently, if you’re smarter than the author.
Maybe the answer is to make it so employment can be had in many places and not just a few? Carry the remote work stuff further and people can work from less dense areas where land is more affordable?
The only other way I see to make housing not an investment would be nationalize all property and everyone rents from the government. We’ve tried that in parts of the world and it wasn’t awesome.
I don't think it has to be. Housing and land aren't the same thing. Land can increase in value while the cost to live on it doesn't if we densify in the face of increased demand. Unfortunately local legislature are captured by homeowners who believe their house is an investment so laws that would fix the "housing as an investment" issue are impossible to implement.
I think the density argument is specious. If you increase density prices may drop in the short term but as prices drop demand increases and supply gets exhausted and you’re back to rising prices, just with more people. To make housing affordable you need to do the opposite and decrease densities by making it unnecessary to live in a small number of extremely expensive urban areas and make it more attractive to distribute people to many different cities. Just cramping more people into small units in SF doesn’t solve jack.
There aren't an unlimited number of people looking to pay $3k for a sf studio. As you build more you eventually run out of people willing to pay that much and prices necessarily decrease.
Ultimately though, this is the affordable housing problem - the prices are so high all those who want to live in sf can’t afford to live in sf. You made my point for me in fact - even if you make high density housing you don’t make it affordable.
The only way to make it affordable is to make it unnecessary to live in SF by unlocking SF employment anywhere.
I live in an area that is high risk for wildfires. Many locals have been dropped by their insurer and are paying ~1% per year to the CA "FAIR" plan. Add on taxes (1%) and the fact that any house in the $500k range around here has deferred maintenance, in serious need of an updating and is likely a (poorly) manufactured home and so you are looking at 1.5% for maintenance. Add in interest (post deduction) and the opportunity cost of 80-100k in an investment portfolio and a home owner here is throwing away a lot of money - (those add up to much more than I pay to rent a $500k house here).
Compounding all of that, in ~20 years of home ownership, I have never lived in one house longer than 6 years - despite my intentions otherwise.
This is just to say that there is no one-size-fits-all approach to the complex problem of domicile/investment and if you live in a high risk natural disaster zone, you are rolling some tough dice.
If you think homes should not be an investment in that way you should argue for home ownership. Everyone owns their home and they do not expect to get more money out then they put in. Just about the same and a place to live
The arguments of being house poor are transient at best. Yes some people buy more house than they can afford, but most people stabilize with time and earning potential.
Sometimes I see these articles and immediately think they are propaganda to the ethos of America.
Stopped reading there. Having personal space and a place to live is a human right, must be provided from birth. I wonder how many more articles like that The Atlantic will need to publish in order to please their ESG gods.
That's the point of the article... If housing is an investment it is necessarily unaffordable for newcomers. If we want everyone to be able to afford housing its value can't increase faster than inflation.
Real estate is seen as an investment because prices tend to appreciate over time, not because of some conspiracy.
IMO this is because:
1. Useful life of an unit is very long,
2. Prices tend to grow with people's income, which have historically grown faster than inflation.
This means that over a reasonable period of time people expect to be able to resell the property with capital gains greater than inflation and, even if not, at a loss much smaller than the cost of renting over the same period.
Prices would need to be expected to decrease until the house ready to be torn down for real estate not to be an investment... Because that's what make things 'consumables'.
Housing prices increasing over time is the conspiracy. Laws in this country are set up to pump housing value by making it hard to densify and providing tax advantages for owning. People's expectation that their house will increase in value has lead to a wide range of policy failures.
Until the government and therefore its constituents accept that housing can't be an investment it will remain unaffordable.
House prices appreciate over time because people's income increase and historically do so faster than inflation.
For instance in the UK, in the early 1970s, the average house price was less than £5,000.
Is it reasonable to expect houses to still cost about £5,000 when the average income pa. is now £38k. Of course not.
OK, what about adjusting this by inflation since 1970? Well it turns that gives about £63k. Clearly that'd still be a massive bargain compared to people's income, which means prices would not stay that low.
Bottom line is that as long as (a) houses do not depreciate fast because of fear and tear, (b) that population grows, and (c) that people's income grow in real terms then housing prices will grow and thus real estate will be seen as a viable investment at least to offset inflation.
Frankly this "housing can't be an investment" stance is ideological.
All stances are ideological. The fact remains. If housing increases in value faster than wages it is by definition becoming less affordable. If it doesn't than it isn't an investment. The only solution to housing affordability is to stop making laws that ensure housing will increase in value faster than wages.
This is not ideological. This is simply a natural consequence of people getting richer (incomes beat inflation). Nothing in my previous comment is ideological, either. It's an observation of the economic forces at play.
Cheers.
That's a stretch. It would be basically impossible for a house to not increase in price unless it was built to such low quality that it disintegrates when exposed to weather or the whole region goes into economic collapse (e.g. Detroit of some time back). Neither of these are conditions you'd want if you can avoid them, so you don't actually want a depreciating house.
The reasons are simple, no conspiracy. If you build a house on one of two empty lots today and then someone wants to build an exactly identical house in the other lot in 20 years, it's going to cost a lot more to build that second house. Because materials and labor costs have increased quite a bit. But the house is identical, so market price of the older house will necessarily be about the same as the new house.
(Yes this assumes the older house has been maintained so it is identical to the new one.)
Obviously housing value increases with inflation. The question is why it increases so much faster than inflation. Yes, there are some natural reasons like land scarcity in the face of demographic shifts toward urban areas, but the biggest reason is laws that have been passed by local legislatures that are captured by homeowners. I think that's a conspiracy.
Does it historically?
Looking at "Case-Shiller Home Price Index vs. CPI (US)" (second graph on this page)
https://www.longtermtrends.net/home-price-vs-inflation/
housing prices tracked inflation very closely until the dot.com era. Then housing prices started to rise faster, until the 2008 crash. Then housing prices pretty much reverted back to the inflation curve.
The last decade has been an unprecedented bull market with low inflation, so yes, over these ten years housing prices have run away from inflation. But now inflation is rising and housing is dropping. It's anyone's guess whether it'll drop back to the inflation curve but it well might.
So it's clear that housing prices have much larger market swings than the steady march of inflation, but it's not clear that in the long run it actually outpaces it much.
Would be most interesting to see this same graph on a per-city basis instead of nationwide average, but I didn't find that info. Certainly housing prices will outrun inflation in a few hotspot markets like SF or NY. But that also means that for most regular cities the housing prices don't increase at the rate shown in the graph.
They just can't stop themselves from saying the quiet part out loud.
I don't know many people in poverty who are overjoyed at owning nothing.
I'm a 35 year old married person living in a Medium Cost of Living area that's making very good money. I do not have student loans and am inches away from paying off my wife's loans. While I don't have sizable savings (largely due to years of non-frugally paying off said loans), this has changed recently. We are also not having children.
I think I'm a textbook candidate of someone who _should_ be looking into purchasing a home, as I'm not far off from being able to put the traditional 20% down (and could do the down payment if I went the FHA route) on something decent in our city. However, I shudder at the thought every time I think about it.
I'm actually very happy with renting long-term and moving as needed. I like the flexibility this affords, the financial stability of a static monthly housing payment, and never having to worry about the "fun" of home ownership (as I really dislike doing house work; would much rather be outside).
Unfortunately, this viewpoint is derided every time the age-old "owning vs renting" discussion comes up. Several greatest hits always make an appearance, such as:
- "Renting is for poor people!"
- "Do you like throwing your money away? Owning _builds equity!_"
- "Landlords suck, so home ownership wins by default."
- "What if you decide you want a new kitchen?"
I loved this article because Jerusalem took the time and did the research to debunk (or at least significantly challenge) all of these talking points while confirming a lot of my suspicions about home ownership that don't seem to get as much attention.
The biggest one that really spoke to me was the common perception that "home ownership is an investment," for several reasons:
- Almost every anecdote I've heard of homeowners profiting off the sale of their home ended with either "I used that as a down payment for my next home" (usually much bigger, for, in my opinion, no reason other than to flex) or "we moved into a cheaper area and pocketed the difference". What if that "cheaper area" is a non-walkable car-adled suburb an hour away from the city?
- A much more common anecdote I hear are people re-upping their mortgage through HELOCs for all sorts of (IMO) irresponsible reasons (like expensive vacations or play-things, like Jerusalem pointed out) and hoping to make themselves whole they sell their house, since house prices "never go down." On its face, it's technically fine since this is "just" a more pedestrian version of a margin loan against an investment portfolio, but it feels really shaky to me, especially since "you" are supposed to own your home, not the bank.
- Maybe I'm super lucky, but I have yet to have a negative landlord experience. Big apartment complexes in nice neighborhoods are typically managed by well-run property management groups, at least in my limited experience.
- SO MANY PEOPLE are quick to mention that mortgages are typically cheaper than rent AND completely gloss over the fact that mortgages are a FLOOR, not a ceiling like rent is. "I sold my house that I bought at $x for $y but paid $z in maintenance and had to pay $w in closing costs and other fees, so I really made $x-$z-$w" is a rare anecdote because I don't think a lot of people track maintenance costs with any sort of granularity. I'm also not comfortable with the idea of "Oh shit, my roof caved in a bit because the previous owner deferred maintenance and now I'm paying $14k" dropping onto me at any moment! (The responsible thing to do would be to build a maintenance fund that's a percentage of the home's value, or something...this gets glossed over too, because...)
- SO MANY PEOPLE get their down payments from their parents! Like SO SO MANY. A shocking number of people, IMO. When you get a down payment as a wedding or graduation gift without knowing some basic personal finance, then "my mortgage being cheaper than rent" is a much easier story to tell, and saving for the $14k floating bomb is much easier to do! Jerusalem calls this out towards the end of the article where he talks about the obvious wealth and racial inequalities inherent to real estate, and I think he was spot on.
The argument on owning vs renting feels a lot like the ages-old "children or no children" debate. Almost every experience I've read or heard about vis a vis parenting sounds like a lot of work, commitment, and sleeplessness I don't want or need, but ends with something like "I wouldn't trade it for anything in the world; you'd have to be a parent to understand." That's a hard gamble.
similarly, too much home ownership is not when there are too many home owners, but rather too few home owners (banks and landlords)
giving the common man the ability to own, as outright as possible, his own land and home, to improve and pass on to his descendants, is the ideal of all just government, against which the elites, rentiers and usurers have always chafed
But as usual, our sick society looks at it through an exclusively financial lens.