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You Can’t Go Home Again

07/25/2011

As the population rises and nature dwindles, humanity has some hard truths to swallow.

One such truth is this: the concept of a permanent ‘home’ is becoming useless.

For years, home ownership has been touted by first world governments as a virtue. As a result, the idea that more living space means more happiness is now widely accepted. But it’s false.

Another myth that was repeated until it became popular gospel is that real estate never goes down in value. The last few years of economic turmoil, accompanied by millions of foreclosures, have thoroughly refuted that notion.

The global economy remains uncertain, and an environmental crisis looms. Call me batshite, but now doesn’t seem like the right time to take out a huge loan that takes decades to repay.

I highly recommend–in my official capacity as unqualified blogger–that you rent a living space instead of buying one. This isn’t just a provision against an uncertain future. It makes good financial success in the present.

A lot of people say that renting amounts to flushing your money down the toilet. But you’re paying for a place to live. How is that a waste of money?

Typically, monthly rent payments are lower than monthly mortgage payments for similarly sized spaces. And by renting, you avoid having to pay for house insurance, property taxes and maintenance. All that is your landlord’s or landlady’s headache–not yours. If anything goes wrong, you call him or her.

When you rent you’re less invested in the place you live, and therefore less attached to the concept of ‘home’. So if your area ever becomes an undesirable place to be–whether the reasons are economic or environmental–leaving it will be less devastating.

And, of course, since renting pre-existing houses discourages the clearing of new land, it’s much better for the environment.

6 Comments leave one →
  1. Lezlee permalink
    07/25/2011 8:22 PM

    Sorry, Scotty B, I think i must be the exception to your generalizations. So, I’m gonna have to disagree. Buying a house was the best decision I ever made. Well, the bank buying me a house, that is. We pay less for our mortgage now than we did for rent. We have enough space for us, now, plus enough room to rent out. Before, we only had two bedrooms. Now, we have 4. 3 of which bring in money each month. Our mortgage, our property taxes, our heat and light… are all paid for. We live here for free. Sure, our mortgage is gonna last us, oh… about a million years, but we can refinance. Right now, while I’m in school, our mortgage is affordable. Later, when I have my career, we’ll be able to pay more. So, for us, we decided to have people pay our mortgage for us, instead of paying other peoples’ mortgages.

  2. 07/26/2011 9:24 AM

    I’m not trying to say buying a house never benefited anyone, and I certainly can’t argue with your personal experience. Taking on tenants is an excellent way to finance a mortgage. You’ve clearly experienced real benefits from owning a home.

    In my post, I was trying to accomplish two things. One was to question some longstanding assumptions about real estate, such as the idea that happiness is proportional to the amount of living space you have, and the idea that the value of real estate never goes down. As far as I can tell, these are demonstrably false.

    My second goal was to suggest that the attachment to permanence associated with home ownership is becoming less tenable, given increasing economic and environmental instability. Debts are harder to repay in uncertain times, and I believe things are likely to grow more unstable in the future. As a result, I think flexibility will become more valuable than equity.

    But maybe not. The world economy could make a full recovery, and we may succeed in solving our environmental problems. I hope so!

  3. Raven Warren permalink
    08/10/2011 5:35 PM

    I’m on the fence. With tenants paying your mortgage, buying a house seems to make sense. Paying for a place to live every month is not a waste but paying someone else’s mortgage each month when you could be paying your own doesn’t seem fun either. And although I don’t own a house myself, I know that owning one gives families a feeling of security and a sense of achievement and that is worth more than any amount of money. But why is it that way? Society says that the ideal life is getting a well-paid job, marrying, buying/building a house, and having kids. Owning a house sounds secure, as the person owning it decides what happens to it and when/if they want to move out of it, but if the value of a house decreases drastically and you want to sell it, you’re pretty much screwed. Instead of having security, you’re trapped and flexibility starts to look more attractive. So, permanence is not necessarily security, as owning doesn’t protect you from the possibility of loss. If you are paying a mortgage and your financial situation changes, you might be screwed. And the upkeep of a house is not appealing to me, at all. Is society’s view of owning a house a status thing, or is there more? I know that I grew up in a rented house and I never saw it as a temporary home. It was safe, and comfortable and where my family was. Isn’t that security? Sorry I still haven’t established much of an opinion even after all of this babble (odd for me), but until now I’ve never thought much more about it than knowing I want to own. Thanks guys!

  4. 08/13/2011 4:20 PM

    You’re right to point out that the decision to buy a house or not isn’t always grounded in just the financial aspects–often it’s about status, or about what’s widely accepted in society. It’s easy to let these things influence one’s decision, but personally I think this should be avoided. What society thinks is best and what’s actually best aren’t always in line.

  5. 08/14/2011 10:16 AM

    On your blog for the first time by way of your Best of Money article submission. Nice work! I just subscribed to your email feed.

    This topic of renting vs. buying is a confusing, non-straightforward one. I think that if money is tight and you’re trying to save as much as possible, renting is the way to go. However, if you’re trying to accumulate long term wealth, buying is better.

  6. 08/14/2011 10:49 AM

    Thank you!

    The decision is definitely an involved one, and like I said the factors involved aren’t just financial–there are often emotional and societal factors at work as well. For instance, having children might incline someone toward buying a house, since, like Raven said, people often associate houses with long-term security.

    On the other hand, having children may also influence one to rent, especially if one thinks the route to economic security in the coming decades will involve remaining as flexible as possible and minimizing debt.

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