A recent article in Bloomberg stated “America Should Become a Nation of Renters.” Because I don’t subscribe to Bloomberg, I was only able to read the tweet thread, but the gist of what they had to say was that housing is not an affordable and stable investment anymore, and as a result, people should rent. Perhaps they are right about the financial incentives not being as strong as they used to, but there are strong reasons why home ownership, and not renting, is a good thing that should be aspired to.
Home Ownership Brings Freedom
When you own your home, you can do almost whatever you want with it. Our stove recently broke. We went to Lowe’s and picked out the exact stove we wanted. I wanted a specific color, and there were features that we liked that we were willing to pay a little extra for. When we were renting, our refrigerator broke. We had no say about which model we got as a replacement.
The same is true if you don’t like the carpet, want to redo the backyard, or even want to completely overhaul your bathroom. Yes, all this stuff costs money, but it’s nice to “have it your way” as Burger King used to say. Money can sometimes be difficult to obtain, but money often equals freedom. Many of us who are into cryptocurrency appreciate how it gives us freedom from fiat. The same thing is true with owning your own home.
When you rent, you’re at the mercy of the owner. My good friend has rented a home for nearly ten years. A couple weeks ago, she found out that the owner wants her to leave the house by July 31st because they want to sell it. They offered to sell the house to my friend for below the Zillow value of the house, which is amazingly generous, but if my friend can’t find a loan, she’s going to have to try to find a place to live in a very expensive market. We offered to let her family stay with us for a while if she can’t find anything—another perk of home ownership: because we own our house, we can say who can or can’t live here.
Home Ownership is a Way to Build Wealth
While housing (in the United States, at least) is probably way overpriced at the moment, buying a house in a normal market is a way to acquire wealth over a lifetime. My parents, for example, do not have a house payment. They bought their house decades ago, made payments for years, and eventually paid it off. When you rent, you never pay off your house, and you never own it either.
Furthermore, when you own your home, inflation works in your favor. We’ve been living in our house for six years now. The Zillow rent estimate for our house is about $400 more than what we’re currently paying. After my parents had been paying for their house for a couple decades, the mortgage on their house was less than what most people were paying to rent a small apartment. Although property taxes seem to go up every year, the mortgage part of a house payment does not.
There Are Advantages to Renting Though…
This isn’t to say that everybody should buy instead of rent. If you’re not planning on living in an area for very long or perhaps are new to an area, buying is probably not the best choice. Renting gives you the freedom to pick up everything and move somewhere else. Renting also frees you from the burden of home maintenance. When a major appliance breaks or a pipe starts to leak, it’s not your responsibility to fix it.
During this hot housing market, renting might currently be the better choice (but maybe not; it depends on your situation and where you live). Right now, there’s a moratorium on foreclosures, and when that’s lifted, housing might become more affordable. The same is true if interest rates rise. Many of us are used to seeing volatile prices in the crypto market, and in a way, today’s housing market seems to resemble this spring’s crypto bull run. Housing typically doesn’t see the enormous dips that cryptocurrency does, so I wouldn’t expect a 50% drop in the price of most houses any time soon, but like crypto, buying does have risk. But it also can have its rewards.
Home ownership may be declining, but that’s not necessarily a good thing. Somebody’s going to own the home you live in, and if you can manage it, it might as well be you. While it might not be right for everybody, it’s often better to pay yourself every month by paying on a mortgage than it is to pay for somebody else’s mortgage.
