Do they mean "buying" instead of "owning"?
this post was submitted on 20 Nov 2024
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No. Having mortgage dues doesn't make one not a homeowner.
The article talks a lot about mortgages. How does the math work if you pay in full at the time of purchase?
Renting could never compare to owning, as Equity is the biggest source of wealth for the middle class in the US. Not owning equity to pass on to your kids is one of the worst mistakes you can make. IF you can afford that sort of thing.
Not owning equity to pass on to your kids is one of the worst mistakes you can make.
"Oops, I guess I made the 'mistake' of not making enough money to afford the outrageous price of real estate. I guess my children deserve to be poor."
Or maybe we should treat housing as an public resource rather than an investment, and encourage the market to keep prices low for the sake of maintaining a healthy society.
you divide the amount of money that it costs by the amount of dollars you would pay to rent something like that per month and then figure that's how long it'll take for you to look at a duck instead of a chicken
Then add a few years, since you'll be the one paying to replace wear items like roof, carpets, and appliances.
That's true in general. And if you assume a perfectly efficient market, yes, renting would never be cheaper than buying. On the other hand, if markets were perfectly efficient, no company would ever be able to make a profit at all.
One market distortion is that in certain times, people will actually pay a premium for renting. People aren't perfectly rational actors. Or moreover, they prioritize things beyond just simple cost. Even if buying is more expensive that renting, all costs considered, often people will pay more just for the stability and certainty that comes with home ownership.
The housing market is also distorted by all the present owners with locked-in 30-year mortgages. This has suppressed the supply of existing homes on the market. Rental companies don't get access to federally-subsidized 30 year mortgages, so they are less subject to this interest rate lock-in.
I pointed out a few things, but these are a few of many. The key thing to realize is that housing is highly illiquid, and its production, ownership, and sale is heavily regulated, taxed, and subsidized. It's a heavily regulated market. This means that the market will not always follow basic econ 101 behavior. Yes, in theory, rentals will include all costs. But that is rarely the case.
In fact, in a perfectly efficient market, it's likely that neither buying nor renting would be beneficial. If everyone acted perfectly rationally all the time, the cost of renting would exactly equal the cost of buying. And in that world, buying would never be worth it, simply because it wouldn't be worth the extra hassle to safe not a single penny.
The cost of renting or buying would be negligible if we prioritized human needs over the human want to hoard wealth
insurance and property taxes and a very large HOA fee that looks almost like a rent payment if you're in a good city
Not the scenario this article talks about. Most people need mortgages, especially first time buyers.
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