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> Starting March, 2009 I was renting an apartment directly across the street from the New York Stock Exchange. It was fun. I’d look out the window and see Wall Street. How exciting! Before that I lived in The Chelsea Hotel with Chubb Rock. Last year we decided to relax and move a little north. Now I look out the window and see the Hudson River. And its quiet and I can walk along the river in the morning with no noise…
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Mortgages are an excellent inflation hedge. Consider it--you borrow a large pool of dollars to buy the home. The value of the dollar drops through the floor. Now you are paying back the loan which was for a fixed amount and doesn't change with dollars worth half as much.
But surely the interest makes up for this. It wouldn't make financial sense for the lender otherwise; why lend money to homeowners if it won't beat inflation than, say, invest it in the stock market?
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Another good reasons to own is that when you own a home, no one can kick you out. When you rent, whether you live there next year is at the landlords discretion. A landlord may decide to sell next year, to renovate, to find tenants who never complain, to let their children live there, etc. Also, fixed mortgages stay the same price, but rents rise.
I understand that your point probably is "as long as you pay your mortgage and taxes, no one can kick you out". I think the likelyhood of being kicked out in both instances is extremely low if you continue to pay your rent/mortgage.
Earlier quoted context omitted.
But surely the interest makes up for this. It wouldn't make financial sense for the lender otherwise; why lend money to homeowners if it won't beat inflation than, say, invest it in the stock market?
In the US, the interest is tax deductible, so if you have earnings to match against that, the effective interest rate to the buyer is only 2/3rds of the nominal rate on the mortgage.
Earlier quoted context omitted.
Another good reasons to own is that when you own a home, no one can kick you out. When you rent, whether you live there next year is at the landlords discretion. A landlord may decide to sell next year, to renovate, to find tenants who never complain, to let their children live there, etc. Also, fixed mortgages stay the same price, but rents rise.
I understand that your point probably is "as long as you pay your mortgage and taxes, no one can kick you out". I think the likelyhood of being kicked out in both instances is extremely low if you continue to pay your rent/mortgage.
If that was their plan (which I doubt), it wasn't very effective. Americans move much more frequently than people in most other countries.
"Lets spell out very clearly why the myth of homeownership became religion in the United States. Its because corporations didn’t want their employees to have many job choices. So they encouraged them to own homes." If that was their plan (which I doubt), it wasn't very effective. Americans move much more frequently than people in most other countries.
The most recent housing market collapse has made America much slower at readjusting to restructuring of the economy--for example, workers in Florida can't easily sell off their homes to move to a different location with greater job density, for instance. I'd like to see more data supporting your assertion.
I could easily refute all the points in that article if I had the time. I'll suffice to give this example: "A" buys a $100,000 house, "B" rents a $100,000 house. Both pay about $1,500 per month. At the end of 15 years, "A" owns an asset worth $100,000, "B" owns nothing. You decide.
If someone is getting $1500 /month rent for their $100,000 house, then reason #1 to own a house is "Rent it out, and get 18% p.a. returns on it"
If you buy one house, one bad tennant could mean six months or more of no rent payments while you go through the eviction process and try to get someone else in there. One really bad tennant could cause tens of thousands of dollars of damages.