Mortgage, schmortgage

George W. Bush (remember him?) used to prattle about the Ownership Society and all its presumed benefits. With regard to ownership of real estate, well, Andrea Harris isn’t buying:

There are a variety of reasons, not the least of which is the fact that if I owned this apartment instead of merely renting it I’d have to pay someone to repair the air-conditioner instead of being able to call maintenance, as I did, and tell them “it’s broke, come fix it.” Another reason is the fact that once you own something, you are responsible for either looking after it or getting rid of it. Especially nowadays getting rid of unwanted real estate isn’t easy. Even foreclosure is a long, drawn-out process involving tedious things like paperwork and talking to legal departments. I am thankful that I have nothing more to worry about disposing when I move than some crappy, beat-up furniture and old books, and I plan to keep it that way.

And apparently Florence King anticipated this years ago:

[H]er theory is that Americans are encouraged to tie themselves to home ownership because that way they’ll be so preoccupied with the constant maintenance the family homestead needs that they won’t have any time to give the government any trouble. Or as she puts it: “Being a home owner transforms him from a thinking reed into a tinkering, puttering, dull, distracted, small-minded bore, and that’s just the kind of citizenry the government wants.” Governments want power, and one of the easiest ways of getting it is to get the people you want power from in debt to you.

I could argue that I was a dull, distracted, small-minded bore when I lived in the CrappiFlats™ for all those years, but I can’t deny that I had a hell of a lot less debt back then.

Francis W. Porretto has already weighed in on the financial advantages, or lack thereof, of buying a house, so I’ll direct you his way rather than repeat them here.





3 comments

  1. Charles Pergiel »

    3 October 2008 · 11:00 pm

    “The AnarchAngel” posted about this on Monday, December 24, 2007:
    Bursting Your Bubble – The Investment Fallacy

    Can’t provide a direct link to his post, but the web page is
    http://anarchangel.blogspot.com/

    Basically his argument is that buying a house is not an investment, but rather it is a “stoploss”. In the long run it will cost less to buy a house than to keep paying rent.

    My brother, on the other hand, lives in the SF Bay Area, where rent is about one half of what the mortgage would be on a comparable piece of property. People are willing to pay more for the property than people are willing to pay to use it. Crazy, but we already knew that about California, right?

  2. CGHill »

    3 October 2008 · 11:21 pm

    In the long run you’re going to have to replace a lot of stuff in that house, too.

    Here’s the AnarchAngel link. This is worth quoting:

    [Interest-only] loans make no sense whatsoever. They are in fact worse then rent; because not only are you not building asset value (in effect you are paying the bank rent), you are incurring a huge liability and risk at the same time. There is no upside to you, and no downside to the bank when you are in an IO loan.

    You’d think that after the events of the last couple of months, IO loans would disappear entirely. I’m not so sure they will.

  3. Francis W. Porretto »

    4 October 2008 · 5:25 am

    Having just yesterday spent $1500 to locate and empty The Legendary Lost Cesspool Of Mount Sinai, I find myself reflecting on how much simpler life was when I lived in a rented apartment and stored my books on shelves propped on bricks. The first of the month was just another day, back then.

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