It is a truth universally acknowledged that an American in possession of a good fortune must be in want of a mortgage. I don’t know if you should buy a house. Nor am I inclined to give you personal financial advice. But I do think you should be wary of the mythos that accompanies the American institution of homeownership, and of a political environment that touts its advantages while ignoring its many drawbacks.
Renting is for the young or financially irresponsible—or so they say. Homeownership is a guarantee against a lost job, against rising rents, against a medical emergency. It is a promise to your children that you can pay for college or a wedding or that you can help them one day join you in the vaunted halls of the ownership society. In America, homeownership is not just owning a dwelling and the land it resides on; it is a piggy bank, where the bottom 50 percent of the country (by wealth distribution) stores most of its wealth. And it is not a natural market phenomenon. It is propped up by numerous government interventions, including the 30-year fixed-rate mortgage. America has put a lot of weight on this one institution’s shoulders. Too much.
The consensus that homeownership is preferable to renting obscures quite a few rotten truths: about when homeownership doesn’t work out, about whom it doesn’t work out for, and that its gains for some are predicated on losses for others. Speaking in averages masks the heterogeneity of the homeownership experience….
