A Washington Post columnist makes a case today against the American Dream of home ownership. Catherine Rampell, in so many words asserts that owning a home is “a fetish”. Kinky!
Anyway, she refers to work done by Nobel-Winning Economist Robert Schiller, who argues that over time, home ownership returns about .03 percent per year after inflation. Schiller points out that were one to invest in the S and P 500, he or she would get a 6.5 percent return annually. So is that suburban lot with a white picket fence really worth it? Huh? How about it, you bourgeois chump? Why don’t you join the cool kids and move to a nice urban high rise, close to mass transit and clubs and members of Richard Florida’s creative Class, who present performance art nightly. And stop having kids. You’re killing the planet. (She actually doesn’t write that, but you know that’s what she’s thinking. But it could be I’m reading more into this than she intends.
Ed Morrissey of HotAir.com offers another point of view. Ed argues that it’s true, one might be able to rent, and perhaps have a lower monthly payment, and the elimination of the mortgage interest deduction might widen the gap even further. Oh- you hadn’t heard about the end of the tax break? Trust me, Washington is talking about it with increasing frequency. It might narrow the dreaded ‘wage gap”. Or not But Morrissey does point out that the monthly payment on a fixed rate mortgage does remain constant (excluding property taxes which in this state at least vary, always in one direction- up), while rent usually increases from lease to lease. So I guess owning a home might give one a little equity at the end of the rainbow, unless you bought in 2006, and tried to sell 2 years later. In that case… Nevermind.
But forget the economics. It’s a lifestyle choice. When I was a kid, my cousin and I dreamed of living in a high rise with a view, a fridge full of tasty steaks, a well- stocked bar and a entertainment center with ear-busting speakers. I think we’d spent too much time sneaking peeks at Playboy Magazine. (We only read the articles, honest!) But I can tell you that the last thing we dreamed of was of owning a house. It’s always been my contention that if men really ran the world, everything would be rented.
So what brought me to this end? A house in Avon on 1.5 acres? (And my cousin ended up in the same situation, by the way)
T.E. Lawrence, better known as Lawrence of Arabia, may have the answer:
“Why do men go to war? Because the women are watching.”
Maybe the same is true of real estate.