The Rent V. Buy Debate Heats Up

• September 17th 2010

by Will Smith

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You may have noticed a recent trend in the wider media to question the wisdom of home ownership, which for at least two generations has been an unshakable American value. Such a question even just a few years ago would have been highly contrarian, but now the case for renting over buying has become a more popular stance than perhaps ever before.

In an August article from the Daily Finance, James Altucher puts forth the idea that renting over owning is now better for reasons ranging from the theory that a home is an illiquid asset (meaning when times are tough, you can’t immediately turn it into cash) to the limitations that home ownership puts on one’s job flexibility (moving to a new job in another location is much harder when you have to deal with selling your home).

As a counter to this stance, The Wall Street Journal’s Brett Arends recently outlined his reasons as to why buying is still the way to go. Many of the reasons he puts forth you’ve heard before (low interest rates, tax advantages), but there were a couple that are less obvious. Arends notes that home ownership offers inflation protection, for example. He also writes that this housing market, historically bad as it may be, is only temporary.

“Sooner or later, the market will clear. Demand and supply will meet. The population is forecast to grow by more than 100 million people over the next 40 years. That means maybe 40 million new households looking for homes. Meanwhile, this housing glut will work itself out.”

But perhaps Arends’ best reason for owning a home instead of renting has nothing to do with economics or mortgage rates or investment potential. It is the simplest reason of all, and yet seems to get lost amid the constant focus on dollars and cents: The home will be yours. For many people, the emotional satisfaction of going to sleep every night in a space that belongs to them — not their landlord — is priceless. (Not to mention that you can make a lot of changes to your own place that a landlord would never permit.) Arends illustrates the point with a story:

“Many years ago, when I was working for a political campaign in England, I toured a working-class northern town. Mrs. Thatcher had just begun selling off public housing to the tenants. ‘You can tell the ones that have been bought,’ said my local guide. ‘They’ve painted the front door. It’s the first thing people do when they buy.’ It was a small sign that said something big.”

See all ten of Arends’ reasons here.

This article originally published at http://dc.urbanturf.production.logicbrush.com/articles/blog/the_rent_v._buy_debate_heats_up/2484.