When I take out a mortgage and buy a house, I own the house. The title is in my name. If I sell the house, I take the profits after I pay off my loan. If the bank forecloses, I take the profits after the loan and attorneys fees are paid off. I can use my equity in that house to borrow additional money. If the house increases in value, my mortgage payment does not go up.
Your turn - how is what I just described a tenancy rather than ownership?
Well, for starters you’re assuming that you sell the house and take out your profits. Give that a shot in Detroit or half of middle america (yeah, I know, fuck all them) because your home town or job went to shit and you’re now the happy owner of an asset worth fuck all.
Additionally, you MIGHT want to live in a place where your job/career doesn’t chain you to your mortgage payment forever (like the problem that we have with health insurance, BTW). And LOL at most foreclosures giving you a stack of money that you can magically buy a nice new house for the one you just had foreclosed on - your credit rating is now shit, and you’re going to pay for the new house with apparently magic beans or something similar, because the vast majority of people in this spot have no equity BECAUSE THEY JUST LOST THEIR FUCKING HOME! Trot on over and see what Wells Fargo is going to do for you with no down and a credit score of dick.
For people like me, having a mortgage for the last 20 years has been almost like printing money, but for a huge percentage of people, they’re better off renting and will likely be so for a huge portion of their life. I’m in a tiny percentage of people who have a high paying stable job/profession - you know, what pretty much no one has anymore. If the huge (unjustified) tax break I get every year on my mortgage insurance wasn’t worth it, it wouldn’t be close. Outside of the Bay Area, LA, New York and a few other places, it still wouldn’t be.
MM MD
This wasn’t an argument of whether it’s better to rent or buy. It’s whether having a mortgage is the same as not owning your home. It’s not.
Ok yes, that is what a loan is. The fact that those monthly payments result in equity in an asset you own rather than equity an an asset your landlord owns (or just cash in their pocket) is a pretty large difference.
Very much no, but like you I’m just some knob on the internet.
I can list twenty reasons not to buy over rent, and twenty the other way. Each person will have different reasons/hopes/needs in terms of their housing.
Or you can just talk out of your ass - which come to think of it, is what we’re all doing here. So carry on, I suppose.
MM MD
Yeah this whole ‘landlords are evil’ angle is just dumb. Some of them are evil, but they aren’t the reason rent is going up. Rent is going up because there aren’t enough homes being supplied to the market.
The government is actually a huge part of the problem in this scenario. It’s the tool NIMBY’s use to prevent affordable housing being developed anywhere near their school district.
Not really. P&I plus insurance plus plus taxes plus maintenance on a house is more than the rent would be to lease the same house. The buildup of equity isn’t a free lunch. If every time you paid your rent you also put $500 in a CD, you would build up equity too. There are certainly some very good reasons to own a house rather than rent one, but not because the relationships are fundamentally different. They are both ways of financing occupancy of a house through a stream of monthly payments.
A mortgage is essentially an option, in non-recourse states. It is possible to buy a house with a 3% down payment and simply walk away at any time - pure insanity. Separately, mortgage interest deductibility is absolutely awful and there is no defense on the merits. The 30 year fixed rate mortgage would not exist without Fannie and Freddie and their government guarantees. All these things inflate prices and misallocate capital.
Well, you can argue that society benefits from people owning their homes. I vaguely remember some societal goods that accrue from community ownership ( neighborhoods, increased participation in communities and schools, things like that.) And I can see the argument for 30 year mortgages in terms of building up equity etc. - but for the most part it’s been a shitshow, I agree. We’re only a little over a decade from the LAST housing bubble, and it’s gonna happen again.
MM MD
The experts I heard in the past say that you should buy houses to rent them to other people. Buying a home to live in it makes you poorer.
You buy and have to take on a mortage for 20years. So once you are finished in 20 years you payed more for the house because of interest than the actual value of the house. After 20 years you might also need to redo the roof or the heating which isnt cheap. So unless the property value isnt steadily increasing you will be poorer 20 years later. After the last financial crises it seems there are also new rules. I listened to one who said that if you lose your job banks now have to force you to refinance your mortgage with much higher interest because you are now a bigger risk.
The main conclusion was buy to make money and not to live in it. Thats how smart people get richer. On the other hand Germany has much less home ownership than other countries for example Spain.
LOL
Lots of people lose money renting out property. The price of income property is such that it’s a competitive business because there’s competition to buy the property up front.
Yup. That’s why saying ‘the landlords are ebil’ is super one dimensional and just trash. Most of our economic problems are systemic issues where the inputs or outputs are fucked for some reason. 20% of people are awful, 60% of people are OK, and 20% of people are awesome IME and that remains mostly true no matter how much money you have. To be clear this means that 20% of people will happily choose to do something awful all other things being equal, 80% will do something evil it’s it’s much better than the alternative, and 20% of people will literally refuse to do evil stuff. The 20% who are straight up evil will find little ways to take something normally virtuous and corrupt it so that it benefits them more at everyone else’s expense.
You can get rid of a full 75% of awful shit by changing incentives because the 60% will go where that leads them with a slight preference for feeling like good people.
I’m not saying landlording isn’t evil, though “evil” is certainly not the right word. But, people do a lot of things without thinking about it. Working for Amazon, eating meat or factory farmed animals anyway, working at a coal factory, joining the military, joining the police, donating to the Democratic Party, employing people, failing to do more to stop people from being oppressed…it’s a long list and landlording is not especially high on the list and it’s not the most direct and certainly not a sufficient unto itself cause of homelessness.
All landlords are kind of scummy, but a part of the debate that often gets overlooked is that many, many tenants, and I won’t say all because I am what I consider a great tenant - suck a LOT. Like a lot a lot a lot.
Being a scumbag is kind of necessary in the business, it’s incentivized.
Micro’s point sounds a lot like Clovis’ not all billionaires
Lol. Owning shares of a mutual fund that has invested in oil and war contractors is much worse morally than owning a small rental property.
Yeah it is, that’s not what most landlords are doing, but still, it is.
I’m fine with broad brushing landlords as generally scummy, but I’m not hearing a lot of alternatives to rental property or specific changes that can be made to the current system. People who provide housing expect to get paid for doing so. I mean, how else are you going to set things up short of full-blown communism?