Seen from another angle, homeownership (once the mortgage has been paid) grants freedom, while a rent-dweller will remain a slave to his landlord forever, with Damocles's sword named "Eviction and homelessness" always dangling over their heads.
I'm a millennial and I plan to rent forever because I value the ability to move out whenever I liked. Even homeowners can't escape that sword of Damocles you describe.
IMO as long as you have assets (stocks, cash, etc.) that you can periodically liquidate to cover expenses, the form of those assets doesn't matter.
I am a GenXer and after some time I got tired of obnoxious landlords. Plus, after living in 12 different places and not knowing when the next "please move out, I need this apartment for other purposes" note comes, is sorta stressful.
Every coin has two sides. I can imagine that expensive real property may be a burden that prevents you from living fully. I can also imagine having a house as an anchor in a place I love.
>not knowing when the next "please move out, I need this apartment for other purposes" note comes, is sorta stressful.
Yeah I've had this happen in the UK, can be inconvenient. The fix is legislation and increased requirements for landlords.
I moved to another country where it isn't possible for a landlord to evict a tenant during a tenancy agreement (unless they are withholding rent) and now thankfully I don't need to worry about this at all.
in some of those countries, repeated time limited contracts are also not legal. once you live somewhere for more than 6 months or a year (or whatever the period is specified by law) then the contract automatically converts into an unlimited contract with monthly payments.
to get evicted, you need to withhold paying rent for some time (more than just a few months) or cause severe damage to the property.
if the property is the only property being rented out by the landlord, then the landlord could evict you if they need that property for their own children or for themselves.
I do fantasize about owning property sometimes. This transient lifestyle makes picking up certain hobbies (a big aquarium for example) a non-starter.
However if I'm going to spend a big chunk of my net worth on property, I'd rather that property be in a place I'm looking forward to retire in, not in a place I'm bound to because of job opportunities.
> Plus, after living in 12 different places and not knowing when the next "please move out, I need this apartment for other purposes" note comes, is sorta stressful.
It doesn't have to be like this though. This is fundamentally an issue with renters rights, not with renting itself. I rented for 10 years and received none of those letters, and in my close circle of friends I only know of one situation where the landlord asked them to leave in that same time period. The only reason I bought was because I couldn't find a rental that would allow a dog.
> as long as you have assets (stocks, cash, etc.) that you can periodically liquidate to cover expenses
"I don't care because I have a trust fund" is not the argument you think it is.
If you're talking about accumulating wealth, I note that (in the UK at least) the gain you can make without incurring tax is somewhat limited but the house that you're living in has unlimited exemption from capital gains tax.
Similarly in Ireland, it's crazy that people here wonder why homes are so expensive when we have an asset class free of CGT where ownership gives you a right to object to the creation of any more supply of said asset. What a deal!
I take it you're referring to people objecting to applications for planning permission? You don't have to own your own home to do that. You don't even have to live in the area affected by the proposed structure. And it's also entirely possible that the authorities will dismiss your objection out of hand.
Very true, anyone can object (or speak in support), though local property owners are the ones most likely to have a clear interest in stopping a given development.
Correct me if I'm wrong, but in the UK you can make an unlimited gain on stocks and shares tax free in an ISA. The only restriction is the amount you can place in it per person, per year (£20k) and the vast majority of people aren't going to be putting that into savings in a given year.
If the rent is less than the opportunity cost of your deposit along with mortgage payments/maintenance taking into account possible gains in the house value as opposed to the stock market then it's plausible you could gain tax free assets faster via investing in an ISA than property ownership especially taking into account the extra opportunities you may be able to take advantage of by being able to move easier for a better job.
I personally am a home owner because I value having control over my environment (decorating, pets etc.) although that could conceivably be fixed via legislation as others have alluded to.
I'm not sold that avoiding home ownership is the best way to accumulate capital in the UK, but I don't think it's completely out of the question as you seem to imply.
The form of those assets absolutely matters. Bonds right now? Bad idea. Cash when we hit the inflation part of the long term debt cycle? Also bad idea.
rent dwellers on the other hand can move whenever they want while home owners are chained to their property. Each time they sell and buy a new property they run a risk of buying lower quality than advertised, selling under value, and they do lose money in fees. Also, home ownership doesn't make you immune from gentrification due to property taxes. Especially if you "only" own a flat in a multi storey building, then you have only little influence in your maintenance fees bills.
That being said, personally, I still prefer home ownership over renting.
Brings up a key point; there are pros and cons to each; and, like most things, there are risks to each. The great thing is being able to look at your own situation and preferences and choose which you think you want. I love economics because it is one big decentralized computation for a future that we don't know. The difficulty is when people start cramming one size fits all on everyone, everyone gets the same result, which is usually worse than people choosing according to their own situation and evaluating pros, cons, and risks. The issue I have with a lot of think tanks is they often have an agenda of forcing one size fits all on everybody because they think they are smarter than the collective decentralized decision making of people with skin in the game.
As someone who moved across 4 countries in 10 years, I had the same opinion. Then I noticed that people who moved as often as me had no trouble to move out, rent their mortgaged apartment for more than monthly payments or sell it at a profit.
Yeah, I keep hearing about how homeowners are "chained", but I'm on my second house and I've also rented in between houses.
One apartment had an 18 month lease and the other an initial 12 month lease, with the option to renew on an 18 month, 12 month, or month by month basis. That means, unless I was willing to incur heavy penalties, I couldn't move until the lease was up. Even now, we're kind of paying a mortgage and rent because there's a couple months of overlap.
Whereas, when I sold my house, I called a realtor, said I wanted to sell and it happened when it happened. We closed in March on our current house, I could sell it today if I wanted.
I think home-ownership and rental both have their places. And someone mentioned a housing co-op situation. That's new to me. That's likely worth exploring a bit as well.
