Thursday, June 2, 2011
Slate argues that, "the American economy is making a significant shift from buying to renting, and that may ultimately be good news." More specifically, the piece makes the case that:
Contrary to the housing-bubble dogma that a mortgaged apartment or house provides a pathway straight to the American Dream—and contrary to the tax code, which encourages buyers and discourages renters with a huge break for mortgage interest—renting is better than owning for many Americans. Indeed, dozens of recent studies have shown that, excepting the go-go bubble years, houses tend not to make very good investments at all: A prospective homebuyer would have made more money taking her down payment, parking it in inflation-adjusted Treasury bonds, and renting.
This is all well and good (and true), but the author ignores a lot of the other, non-economic benefits of homeownership. First, there's the security of knowing that, as long as you make the payment, no one can take the place away from you. The landlord can't turn your dwelling into condos at the end of the year. Second, there are real autonomy benefits to home ownership. You have the freedom (and incentive) to install expensive window treatments, granite countertops, and the hot tub of your dreams. Finally, other than wearing sweater-vests, there's just nothing else in our national culture that signals a person is mature, and trustworthy, and respectable like owning a home.
A house may not be a good investment, but it is a terrific consumption good.