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I actually think you are right that the real challenge is spreading fiscal responsibility. However, it doesn't follow that everyone should own a home, or that

I actually think you are right that the real challenge is spreading fiscal responsibility. However, it doesn't follow that everyone should own a home, or that rent is somehow evil. If you rent, you pay rent. If you own, you pay interest on a loan[1] and maintenance costs. There is also a forced savings component in the form of mortgage principle payments. There are also less tangible benefits to both renting and owning. Renting is entirely flexible and allows you to relocate with ease. Owning gives more flexibility in customizing your home. Different people will ascribe different values to these benefits. Especially for someone who does not yet know where they want to settle long term, renting might be very attractive. Because of the forced savings aspect of owning, renting will almost always be cheaper on a cash-flow basis. Therefore, if a person earns a middle class income[2] and is fiscally responsible, it provides an opportunity to put money into a diversified, low-cost investment portfolio. Eventually, that portfolio should grow to the point where purchasing a modest home is possible. What's more, it will hopefully start a habit that will continue through life, and eventually provide for a comfortable retirement. So again, I absolutely agree with you that finding a way to better teach smart personal finance is critical. I just don't see at all how it follows that everyone must own a home (immediately). [1] Or if you own outright, you pay the opportunity cost on funds that could be invested elsewhere. [2] Obviously at a certain level of poverty, there simply is no additional money to put away, even after any discretionary spending is cut. That isn't an issue of affordability of homes though; it's an issue of poverty, which needs to be tackled directly.

okc 11y ago
When someone buys a house to let, they are making property prices more expensive for everyone. I do however agree with you, in essence. But I find it genuinly shocking you that you see a low cost portfolio as the road to ownership. Perhaps this is a uniquely American philosophy? The point of contention in this debate, probably boils down to if you see access to housing as a social issue or an investment opportunity.
- tempestn 11y ago
  I'm Canadian, not American, but perhaps? I honestly (literally) don't understand what shocks you exactly. Save money -> invest money to grow savings -> time passes -> eventually you have enough to buy a home, if you want. I'm guessing you're saying that homes are so expensive, most people could not reasonably afford one even with disciplined saving and investing. But at least as a long term state, that seems logically impossible. The reason being, if homes were that expensive, no one would buy them to rent out either; because, either they would have to charge rent sufficiently low that people could afford it, in which case they wouldn't make any return on their investment given the high cost of the house, or they would charge high enough rent to make a decent return, in which case no one could pay it. Since the supposed problem is with home ownership rather than with finding decent places to rent (aside from special cases like San Francisco,) that doesn't seem to be the case though. Now, special cases may certainly exist in some markets that causes housing to be scarce, but that will tend to make both prices and rents high. I agree that that situation (limited access to housing) IS an important social issue. But it is distinct from the ability to purchase a house, which doesn't seem necessary or wise for everyone to be able to do without first saving. Edit: Perhaps you were just saying that given low interest rates, one would not expect to earn much on a conservative portfolio. If so, I agree; any appreciation would be a bonus, but the main thing is the savings side.
  - okc 11y ago
    Like I said, I think we have a similar view. My objection if any, is based on the idea of a risk based portfolio. But it seems you actually mean more generally: savings. All these issues are of course very local. Being English I probably have a very different perspective on what the issues are regarding the affordability of houses, let alone what our specific views are. Primarily I see housing as a necessity rather than a financial opportunity. Do you think people who own a house should be allowed to buy a 2nd one and push first time buyers out the market? What this means practically for me is that societies using these rental and Lordship systems, should give preference to those seeking to buy a house over those who have one already. The delivery and form of this preference is obviously complex and very tied to local variables like employment and banking structures. Generally I think the renting system exploits the renter and benefits the landlord - esp when the renter has no other option. This is a big issue in England as the gap between house prices and peoples average savings has rocketed in the last 50 years - especially for those in the lower average salary bracket. What does society do when the average working person cant even with savings get a mortgage? In this scenario renting fuels the inequality.

okc 11y ago

When someone buys a house to let, they are making property prices more expensive for everyone. I do however agree with you, in essence. But I find it genuinly shocking you that you see a low cost portfolio as the road to ownership. Perhaps this is a uniquely American philosophy? The point of contention in this debate, probably boils down to if you see access to housing as a social issue or an investment opportunity.

tempestn 11y ago
I'm Canadian, not American, but perhaps? I honestly (literally) don't understand what shocks you exactly. Save money -> invest money to grow savings -> time passes -> eventually you have enough to buy a home, if you want. I'm guessing you're saying that homes are so expensive, most people could not reasonably afford one even with disciplined saving and investing. But at least as a long term state, that seems logically impossible. The reason being, if homes were that expensive, no one would buy them to rent out either; because, either they would have to charge rent sufficiently low that people could afford it, in which case they wouldn't make any return on their investment given the high cost of the house, or they would charge high enough rent to make a decent return, in which case no one could pay it. Since the supposed problem is with home ownership rather than with finding decent places to rent (aside from special cases like San Francisco,) that doesn't seem to be the case though. Now, special cases may certainly exist in some markets that causes housing to be scarce, but that will tend to make both prices and rents high. I agree that that situation (limited access to housing) IS an important social issue. But it is distinct from the ability to purchase a house, which doesn't seem necessary or wise for everyone to be able to do without first saving. Edit: Perhaps you were just saying that given low interest rates, one would not expect to earn much on a conservative portfolio. If so, I agree; any appreciation would be a bonus, but the main thing is the savings side.
- okc 11y ago
  Like I said, I think we have a similar view. My objection if any, is based on the idea of a risk based portfolio. But it seems you actually mean more generally: savings. All these issues are of course very local. Being English I probably have a very different perspective on what the issues are regarding the affordability of houses, let alone what our specific views are. Primarily I see housing as a necessity rather than a financial opportunity. Do you think people who own a house should be allowed to buy a 2nd one and push first time buyers out the market? What this means practically for me is that societies using these rental and Lordship systems, should give preference to those seeking to buy a house over those who have one already. The delivery and form of this preference is obviously complex and very tied to local variables like employment and banking structures. Generally I think the renting system exploits the renter and benefits the landlord - esp when the renter has no other option. This is a big issue in England as the gap between house prices and peoples average savings has rocketed in the last 50 years - especially for those in the lower average salary bracket. What does society do when the average working person cant even with savings get a mortgage? In this scenario renting fuels the inequality.