THAT OLD HOUSE. Home ownership creates wealth, and long-term renting is akin to flushing money down the toilet. Right? Well, think again. A study by The New York Times's David Leonhardt finds that the benefits of renting aren't exclusive to the sub-prime exurban buyers who can't afford their mortgages. In every major metropolitan area, including New York and D.C., home prices would have to make an unlikely rise of between 4 and 5 percent annually for a buyer to break even after five years, which is the average length of time recent homeowners have stayed put. Over the same five-year period, renters were projected to spend far less on overall housing costs.
There are other economic benefits to renting. Research shows that across the United States and Europe, regions with high homeownership rates also have higher unemployment. It makes perfect sense when you think about it: Tying yourself down to a home means you're less likely to accept a new job in another city. You're also more likely to take on a stress-producing, sleep-depriving, carbon-emitting commute, all because you're tethered to the house that seemed like such a great idea. As Leonhardt writes, "Clearly, there are benefits to owning a house beyond the financial, like the comfort of knowing you can stay as long as you want or can fix the roof without permission. But real estate has been sold as more than a good way to spend money. It has been sold as a can't-miss investment." And that's just not the case.
--Dana Goldstein
