Another week, another empty argument against the virtues and benefits of homeownership.
It seems like there’s this constant drumbeat against homeownership. Uber-hip metro journalists and trendy urban planning types unimaginatively and hopefully declare the death of the suburbs or the death of single-family homeownership as a lifestyle with the regularity of a smoking habit.
Most don’t rise to the level of being worth mentioning. Once in a while though, and too often lately, the drumbeat is getting louder.
A few weeks ago we had a New York Times blogger – an urban renter who’d never owned a home – clocking in with the usual rant against homeownership, accented by a premise about housing finance that was so wrong that there’s really no way to make it right.
That was simply a case of a vegetarian reviewing a steak house.
This week it’s even more bizarre, and comes from a LinkedIn influencer, James Altucher.
Here’s the column. Go on, take a read. I’ll wait here.
Ok, so you see it’s styled like a Dummy’s Guide, but a guide to what is hard to say. A Dummy’s Guide to Not Doing All the Dumb Things the Author Did That Everyone Else Figured Out by Age 22?
Apparently, Altucher went to college, got married, bought a house, invested in the stock market, had children, chose a career, read books, watched movies and ate food all without ever putting thought into a single decision.
And he assumes that everyone else is like that too – that they don’t put any thought into their life path, the food they eat, the media they consume, the investments they make, the children they have, the major life purchases they make…
Seriously, this is assuming everyone has the same lack of impulse control or consequences as Kim Jong Un. At least we know now who was the target market for Bad Idea Jeans.
Oh yeah, back to housing.
Here’s the money shot.
B) House. Oh sure, you can buy a house for $200k and sell it 10 years later for $400k. That’s the extent of how people think about this decision. We’re not allowed to think deeper. It’s the American Dream. It’s ROOTS. It’s what’s needed to create stability before we can CREATE. We NEED A HOUSE. It’s drilled into us from an early age. Not even the white picket fence. Just something innocuous that’s implanted like a secret science fiction chip into our brain: “Just a place I can rest my feet and call my home”. “A place I can plant flowers.” “A place I change the walls”. ROOTS.
The desire for owning your own home – not renting, not living in a communal dorm, not living in a space at the pleasure of a ruler – is one of the foundations of Western civilization. It’s not a secret science fiction chip implanted, and it’s not brainwashing.
It’s such BS. And again, I write about it. But: maintenance, property taxes, interest payments, more maintenance, time spent, lack of flexibility, lack of ability to maximize your income because you are stuck, illiquidity of a massive investment, massive debt…
Never mind that renting is more expensive than buying in the 100 largest U.S. metros.
Never mind the equity.
Never mind that return isn't the only thing you consider with investments. There's also risk. And the other kind of risk -— the risk curve for renters —is far greater than the risk for homeowners. Miss a few rent payments and you're on the street. Miss a few mortgage payments, and your mortgage servicer has to contact you to work something out. You can literally go for years still in the home, working on getting your mortgage modified.
– and is the debt backed by… the US government. God Praise the Queen! Or the President. Or the Minister of Security. Whoever. Someone has their hand in your pocket. There’s a hole in your pocket. They are feeling around past the hole.You! My good friend. Have just been molested.
While it is a legitimate criticism to say that housing finance as it stands today with Freddie and Fannie in conservatorship isn’t sustainable, it’s quite another thing to compare housing finance to being molested.
That’s just me. Your mileage may vary.
Homeownership isn’t for everyone. It’s not the smartest move in certain high-demand markets, or if your job or lifestyle requires you to move regularly. And unfortunately, it’s not the wisest or easiest choice if you’re up to your neck in student debt.
Owning a home also isn’t something that magically transforms people into more responsible, respectable citizens. Somewhere along the line some yahoo looked at homeowners and committed a post hoc ergo propter hoc fallacy, where they saw A and then B and assumed, wrongly that A caused B.
Even before credit got tighter than Dick’s hatband, to buy a home people had to have been responsible with their money and their credit. They wanted to be involved as neighbors and community members. They had to become more secure and successful.
But the aforementioned yahoo looked at this and said that it must be that homeownership is what makes people responsible and successful, so let’s turn everyone into homeowners.
Derp. Hence Washington’s housing policy and the many subsidies that the housing marketplace should do without.
(By the way, here are a few great ideas to reform housing finance, that at least deserve a hearing.)
But that doesn’t change the fact people don’t buy homes because they aren’t thinking or they’ve been brainwashed.
Having a place of your own that’s yours – “every man’s home is his castle” – is the American Dream because that's what people actually want, not because it’s been pushed on them.
Let’s finish on a Cicero quote, because why not?
“What more sacred, what more strongly guarded by every holy feeling, than a man's own home?”