Renting is Throwing Money Away, Right? (2015)

A mortgage payment is a lot lower than current market rent, however. (I bought a 4 bedroom house in London and we pay about £1200 per month mortgage on that, although we actually overpay to decrease the principal faster).

Part of the reason I was able to buy, of course, was that I had saved a bunch of money, some of it invested in shares. Most people renting probably don't save as much as I habitually do, mind.

The strictly financial part of the calculation is important, but personal cost of volatility may be even more important for those in a position to choose to rent or buy. I suggest it should also give pause to those who plan to build extensive social capital somewhere long term, but continue to rent.

I view real estate ownership as a personal hedge. As we've seen in San Francisco from displacement of those in less lucrative sectors, rent that floats exposes you directly to the prosperity -- and inflation -- of all sectors in a region: in the future, that sector may not be your own. Property taxes expose you to this effect, but it is attenuated in magnitude (doubly so by California's Prop 13). The inflation of rents rendering your employment in a sector in a place obsolete is not so important if you can pick up and move, but it can prove socially expensive (and not priced in) if you have roots, are a contributor to civil society and/or have children. I feel badly for lifetime-renters-by-necessity those whose social capital is wiped out by these fluctuations without any compensation.

As I see it, buying reduces the cross section of your outgoing flows to more radical local fluctuations, binding it to fixed or more moderate internationally-floating indicators (like ten-year treasuries, or LIBOR).

Notably, no major family outgoing flow is so volatile: groceries have similar costs nationwide. Many other goods are globalized, have substitute options, and little friction: housing stands out as the big exception.

I also suggest that marriage-house-children is not mere tradition, though it is that too. It is also a recognition of the increases in cost of volatility to the family unit: finding mutual job opportunities, and then the complexity of transplanting a child.

Indeed. It's quite hard to make a profit from selling your own home in Belgium unless you have lived there for a long time. However, it appears that these extra costs are what prevents the Belgian housing market from inflating the way it does in the UK or US, eventually resulting in lower costs for both renters and buyers. A three bedroom house in a desirable suburb of Brussels costs less than a 50 sq m one-bedroom flat in an undesirable area of London.

> You're going to have a tough time finding a homeowner who will let you live in their house for less than their costs.

That is true as to costs imposed by the renter (breaking the gas lines / scratching the floor), but completely false as to costs the landlord has to pay regardless. It doesn't matter what the property taxes are; the landlord will rent to you if he makes more money by renting than he would by not renting. If your rent doesn't cover his property taxes, then it sucks to be him - both of those quantities are negative, but you can still rent from him.

All I know is I put 10% down, had tenants pay the mortgage by renting out the three other rooms while I lived in the other one and sold it 3 years later for 100k more than I owed. My outlay was close to nothing on a net basis and it proved to be a really great tax shelter when I got a raise.

Also I was able to set roots down and get to know the city and feel some semblance of ownership in the town. That and my mortgage never rose except for when the value of my home rose with taxes.