Homeownership is the rational choice when (1) you expect to live in the same place for a long time; (2) the value of a home is either stable or rising, and is expected to continue like that for a long time; and (3) you have assurance that if you need to liquify your assets on short notice, you'll be able to sell your home or take out a second mortgage easily.
None of that is true for most people under 45 now. Lifetime employment has all but disappeared. The 2008 financial crisis has shaken people's faith in housing as a safe investment. You don't want to tie up a large percentage of your net worth in an illiquid asset that doesn't gain much value, especially if you need to be able to pick up your stuff and move across the country at any time. Therefore, renting is the rational choice for us.
The problem is what to do when you're old. If you happen to own a 5-bedroom house, you can rent out a part of it or sell it and move to a smaller house. In either case, you'll have enough income to enjoy a comfy retirement. Owning a home, in that sense, is like having a massive savings account.
Renters can get the same benefit if they save up a lot of money or invest smartly, but that takes more discipline than just making mortgage payments each month. I wonder how many renters are actually aware of this difference, versus just spending their extra disposable income on fancy clothes, booze, and gadgets.
None of that is true for most people under 45 now. Lifetime employment has all but disappeared. The 2008 financial crisis has shaken people's faith in housing as a safe investment. You don't want to tie up a large percentage of your net worth in an illiquid asset that doesn't gain much value, especially if you need to be able to pick up your stuff and move across the country at any time. Therefore, renting is the rational choice for us.
The problem is what to do when you're old. If you happen to own a 5-bedroom house, you can rent out a part of it or sell it and move to a smaller house. In either case, you'll have enough income to enjoy a comfy retirement. Owning a home, in that sense, is like having a massive savings account.
Renters can get the same benefit if they save up a lot of money or invest smartly, but that takes more discipline than just making mortgage payments each month. I wonder how many renters are actually aware of this difference, versus just spending their extra disposable income on fancy clothes, booze, and gadgets.