Arguments Against Owning a Home and Specialization of Labor
zacwitte.comThese arguments are persuasive, but there are two items that aren't well addressed:
1. Principle-agent problem. If I have my own house, I'm more inclined to maintain it well. If I am a renter, I'm not inclined to, for example, change the furnace filter on a regular basis. If I'm a landlord, I don't have much incentive to treat a broken appliance as an opportunity to replace it with the optimal price / performance / efficiency replacement, but instead to simply repair it to functional or replace it with a low end item, because I can't capture the additional $10 / month the better one might be worth to the tenant.
2. Predictability of future expenses. If you rent, you are subject to changing rents. If you own, your only uncertainty comes from tax increases and maintenance. You can insure against things like fire and storm damage, but you cannot insure against rising rents.
I rent, but it's misleading to argue in favor of renting and completely ignore the benefits in the other direction.
You make excellent points. Going off your first: In addition to maintaining a home you also -improve- your home. For instance I've painted every room in my house. My basement was only sealed when I moved in; it now resembles a construction site as I am partitioning it off into various rooms, adding walling, carpeting, electrical, so-on. This is my home and I make it the way I want to live. If one of my renters in my investment properties tried something like that, I'd wrap them up in destruction of property and violation of contract legal charges.
And there is one other HUGE incentive on owning your own home, it's YOURS. You won't get kicked out unless you don't pay the bills. I can not put into words the mental at-ease it puts when you know you own something, especially when that something is the roof over your head at night (That almost sounds consumerist doesn't it? lol). And before anyone commits to the fact that paying off a home takes 30 years, keep in mind it's like a credit card: if you pay the minimum payment, that's what you'll get. It's always good to pay a little more even if it's 'simply once in awhile'.
Good points. In an ideal world, the principal problem you describe should be dealt with by free market forces. I choose the apartment based on cost and quality. If the landlord uses low-quality materials or doesn't maintain the property I'm less willing to pay the high rent and might move out.
Rent's aren't completely predictable, but home ownership is far less predictable. What happens when you discover there's a leak in your roof and you need to shell out $10,000 to get it repaired? What happens when the Whole Foods moves into your neighborhood and your land values goes up so you're stuck with higher taxes, or mortgage rates go up and you have to pay a higher interest.