The Rent V. Buy Debate Heats Up

by Will Smith

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.com/articles/blog/the_rent_v._buy_debate_heats_up/2484


  1. Mike said at 3:26 pm on Friday September 17, 2010:

    I’d love to own a home for all the reasons Arends says…the pride of owning your own place is priceless.  I’ve owned two houses prior to renting again starting in 2008, and there are the immediate financial benefits of tax deductions and inflationary risk reduction (however not price reduction). 

    It’s currently the timing that is keeping me from buying.  I have a very good income and credit; I’d easily qualify for mortgages.  However, like a lot of people, I’m skittish about prices falling again with so many forclosures pending, lack of job creation, etc.  Flexibility is very important, as we move around jobs much more than we did in the past, and the break even points on home ownership is longer than it’s been historically. 

    Having said that, the rental market in DC is pretty tight, and rents keep climbing.  Eventually (although I don’t think it’s within the next year or so), rents and mortgages will get close enough where buying is attractive again. 

    So, yeah, it’s a temporal thing.

  1. Mateus said at 3:41 pm on Friday September 17, 2010:

    I think that what is going on in DC and what is happening in the rest of the country in terms of the housing market are very different situations. DC has seen its home values drop for sure, but now it seems that they are rising as values continue to struggle everywhere else. I think that interest rates being what they are and prices still being low, buying makes sense now IF you are in a good financial position to do so.

  1. Janson said at 4:27 pm on Friday September 17, 2010:

    “Owning your own home” sounds great to me. But let’s not confuse renting from the bank (through a mortgage) with owning. And I don’t know too many people in their middle ages that don’t have a mortgage payment. That said, when the press starts to get negative on any asset, it’s usually about time to buy it…

  1. Mike said at 5:03 pm on Friday September 17, 2010:

    I find this link to be very helpful in determining your own situation of renting vs. buying.  Lots of good advanced features.

  1. Mike said at 5:08 pm on Friday September 17, 2010:
  1. uh said at 9:39 pm on Friday September 17, 2010:

    wow i cant believe this site is promoting home ownership

  1. Jason said at 9:26 am on Monday September 20, 2010:

    @uh No they arent “promoting” homeownership, they are just presenting an opinion. Last time I checked, thats what blogs do. Get over it.

  1. victorianinbloom said at 10:43 am on Monday September 20, 2010:

    in some parts of DC buying is cheaper than renting. also, buying a property in the city - especially if you are paying less than market rent rate - allows you to move, while renting out your property.

  1. John Lumsden said at 1:40 pm on Wednesday September 22, 2010:

    I can not believe what a great time it is to buy a house or condo. Prices are not going to continue to decline. They are practically giving away mortgage money. We will never see rates this low again at least in our lifetime. Buyers should be busting down doors to see property and buy it! Those waiting on the sidelines will be left in the dust.

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