Should we all own homes?

After the housing bubble burst and we were plunged into recession, the federal government jumped in to immediately re-inflate the bubble. There is plenty of reason to think this was a necessary move. Too much of our economy was tied up in developing residential real estate to switch so suddenly. But at this point we need to seriously consider whether enticing people to own homes does more long-term harm than good.

John Cole lays out the good side of renting:

Not owning is nice. You can move whenever you want. If something breaks at 10 pm at night, you don’t have to frantically work to fix it- you call someone and it is their problem. If you change your job, relocating is easy. If you just get tired of your current location and want a change of pace, it is easy to move. You aren’t locked into a job, a mortgage, and a location. It’s nice knowing that if you want to move, you just need to get two u-hauls (one for your possessions, one to haul your cat) and you can beat a hasty retreat.

I’d add that increased mobility helps more than the person moving. It helps the entire economy when people can work where their skills will best be put to use. Think of how many people, especially now, are stuck in a particular area just because they don’t want to sell their house for a huge loss.

Luckily, the federal government is taking a hard look at the considerable subsidies granted to home owners. If home ownership is so great, certainly it can stand on its own?

10 Comments

  1. Ian

    No we should not all own homes, but not for the reasons you list. Home ownership is not a right. People should only be given mortgages they can afford and have sufficient credit for. Giving mortgages to people who can’t pay and then acting like that’s profit is what built the housing bubble.

    Renting is generally a bad idea if you can afford to own. Its the same reason leasing a car is generally a bad idea. When you return the leased car or leave the rented apartment, all of the money you’ve spent is gone forever. If instead you get a mortgage (responsibly with a good down payment and interest rate) and make more than the minimum payments (feasible if you live within your means), when you move you can sell the place and recoup some investment. You could then use that money to pay the downpayment on the next place, and cover moving costs, live off of it until first paycheck, etc.

    “If something breaks at 10 pm at night, you don’t have to frantically work to fix it- you call someone and it is their problem.”

    I laughed at this. Renting doesn’t always mean apartment complexes with a maintenance staff. What if you rent a house from a little old lady whose son is her handyman in his spare time?

  2. Ian

    I should add that car leasing isn’t quite as bad, since cars are not an amazing investment anyways. Houses can be something you can borrow against in the event you get, say, cancer.

  3. Chris

    “Renting doesn’t always mean apartment complexes with a maintenance staff. What if you rent a house from a little old lady whose son is her handyman in his spare time?”
    True, but it still isn’t your responsibility in the same way.

    Btw, here’s a piece from the Times today about how home loans don’t really match up with the new reality.

  4. Ian

    While there is a lot of truth there, remember that making minimum payments on any debt is stupid. If you honestly intend to pay a home loan in 30 years, and not say 5-10, then you probably are going to run into trouble at some point.

  5. Clint

    From an environmental perspective, I don’t think it makes sense to encourage pervasive home ownership. It’s wasteful. Same for car ownership.

  6. Chris

    Clint,
    That’s another good point. We shouldn’t necessarily make it harder or impossible to buy a home, but given the economic inefficiencies and negative environmental impact pervasive home buying creates, we certainly shouldn’t subsidize it heavily.

  7. Ian

    I actually don’t see any issue with subsidizing it. There is nothing inherently wrong with home ownership. I still just think that loans should only be given to those with proven credit and the means to afford the payments. The system will self-regulate as the number of potential buyers decreases.

  8. “From an environmental perspective, I don’t think it makes sense to encourage pervasive home ownership. It’s wasteful. Same for car ownership.”

    I agree. And, as soon as I can, I’m going to rent a nice big house on a wide open piece of land out in the country. Maybe the problem (environmentally) isn’t ownership, but the way we construct our communities. You can buy a condo. You can buy an “apartment” or “flat” or whatever you want to call it. Environmentally speaking, it’s not a question of ownership. It’s a question of what you choose to own.

    And frankly, Clint, I’m surprised that you would be against ownership. In many ways, it’s the far more democratic way of life. After all, if we’re all renting, who will we be renting from? Ownership is about more than building equity. It’s about staking out a place in your community. When you buy, you’re not just invested in yourself — you’re also more invested in the community. While I have no data to back it up, I would bet that more home-owners attend township meetings than renters. Even if it’s only by virtue of their own investment (even if it’s only due to their inability to pick up and leave), owners are often more community-minded.

    ——

    That being said, I agree with Ian. Both have advantages and disadvantages. If your finances can support ownership — buy away. If not, find a nice place with a responsible landlord and enjoy.

  9. Clint

    huggybear,

    “Maybe the problem (environmentally) isn’t ownership, but the way we construct our communities.”

    Good point. I would agree with that.

    Aside from environmental concerns, I think the problem with encouraging pervasive home ownership is that it encourages massive debt burdens, and, to a degree, social isolation. All of us don’t need to have a house and a plot of land to ourselves.

    While I agree that, individually speaking, it’s better to own than to rent, I’m not convinced it makes us more community-minded in a positive way. Owners are concerned about their communities, but often only with a mind toward property values. That’s where we get into the gentrification issue – native/low-income residents being priced out and de facto segregated from everyone else.

  10. Ian

    But aren’t we arguing that low-income people shouldn’t get home loans they can’t afford? I mean that’s what caused the housing bubble.