I was taught that everyone should eventually own a home. Actually, like so many of these cultural imperatives, I didn’t so much learn this as much it was absorbed into my head through some kind of osmosis. Owning is just “what you do” eventually, once you can. You’ve probably heard some of these phrases: “Renting is like throwing money away.” “When you’re older, you’re not going to want to stay in an apartment.” Even: “Are you still renting?”
I believe that renting can be better than owning in many cases. What do I mean by “better”? (Note that I’m defining the weasel word “better” prior to proving the assertion.) “Better” to me involves not only financial considerations, but also mobility and security.
Often times, people will make the conclusion that if they can get a mortgage with a monthly payment they can afford (often stretching the mortgage terms out to 30 years, which don’t forget is 30-40% of your entire expected life) that’s about equal to their rent, then owning is a good idea.
Unfortunately, the math doesn’t work that simply. First, people think that mortgage payments are the only thing you owe on a house. But people often forget property (and other) taxes, which can be a few percentage points of the house’s value, on a recurring basis. Ouch.
The talented wonks at the New York Times have a great infographic on renting versus owning. It puts together many of the factors that can influence a decision, and thankfully includes property taxes. But there are a few categories that it doesn’t include: Refrigerators. Washer dryers. Couches. Toilet repairs. Roof leaks. Boilers. All the things that you don’t need to care about when you rent. You call up your landlord and say that something needs to be fixed, and if he or she isn’t a slumlord, it’ll get done eventually and not cost you a penny. That’s nice. What do you do when the toilet breaks at 3AM and turns your staircase into an approximation of Niagara falls? You still have the same problem, but now you also need to find a way to fix it, and then pay for it. Not awesome.
So owning costs you more money over the short term. What about the long term? After 30 years of ownership, you have a house, while renting you have nothing. Owning wins, right? Well, maybe. Because renting also allows you flexibility. Renting doesn’t buy you a house; renting buys you time, and you can’t put a cash value on that.
A few years ago, I decided I was going to leave New York and move to Portland. How did I get out of my apartment? I called my landlord, and told her that I would be out in 45 days (she was cool, so I gave her more notice than I needed to). 45 days later, I handed her my keys and left. If I had owned that little shoebox, think of the extra effort that would have been involved. I would have had to find a realtor or buyer and gone through that whole process. The extra effort might have kept me from moving and pursuing my dreams. Think about that. You may have a dream to own a home, but don’t let the desire for home ownership eclipse your other dreams.
I know that there is a kind of insecurity involved in renting. I rent an office, and twice in the past year I’ve had to move because the office has been kicked out of its space. It wasn’t fun, but if it had been my house, it would have been extremely stressful. When owning a house, that would never happen. On the other hand, I can never get foreclosed on while renting.
I’m not saying that I’ll never own. I’m happy where I am, and don’t have plans to leave anytime soon, and as long as my income remains stable (something I’m working on) the calculation may change. What I’m saying is that it’s not always the best choice like we are led to believe.
More importantly than the actual decision, it’s important to acknowledge the implicit cultural pressure we are all under. We tend to go along with these ideas because we don’t realize that they have been planted in our heads by other people. It is our responsibility to acknowledge this, though. Once we realize that these ideas are not our own, it is imperative that we question them relentlessly. Be especially worried when things are seen to be so obvious as to require no explanation. Nothing is “just because.” Not even your own home.
But enough about me. Have you decided to rent or own? How did you decide?
Latest posts by Mike Pumphrey (see all)
- This time it’s different, or not - January 21, 2018
- What to do with the extra tax money in your new paycheck - January 18, 2018
- The HSA testing period might have less downside than I thought - January 15, 2018