“Millennials spend a lot of time bemoaning their inability to buy a home, forcing them to keep renting. They should want to stay renters, if they know what’s good for them financially.”
You son of a bitch.
This fucking article, written by an economist, is trying to sell the idea that people are better off renting than owning a house. And specifically, millennials are better off doing it. You wonder why young people hate the boomer generation? Well, this is a pretty good piece of evidence. Take away the condescending tone and you actually are left with malicious advice.
It’s amazing to me the slight of hand that is performed in order to make the pitch in this article. The author actually says that buying a house is a losing proposition. “…it has cost the homeowner 3% per year to own a house before taxes, maintenance, utilities and insurance. That’s a real negative return.” A goddamn economist, who manages investing funds, is selling this shit.
Then this paragraph:
“Some millennials were caught up in the subprime mortgage boom and collapse, and remain scarred by it. They believed they could buy houses with no money down and never shell out a dime because continuing rapid appreciation would allow for continual refinancings. So the bursting of the subprime mortgage bubble and subsequent one-third decline in house prices was a rude awakening, especially since it was the first nationwide drop in values since the 1930s.”
This needs some unpacking. First, not just millennials were caught up in this shit. Everyone was. But who was most vulnerable to it? And that snark about what millennials believed? You fuckers sold them that belief. You convinced them. They had no prior experience in real estate investing and falsely trusted you. So then we get the first housing crash since the 1930’s. Thanks for that.
Look, I’m no economist. I’m just a former renter who became a homeowner. When I went to purchase my new house, my simple criteria was, “is the same cost as what I’m paying in rent?” That was my budget and that’s where I went. I completely understand the issue of house prices being insane, but I also see what rent costs and it’s not much better. So, I encourage anyone to buy when they can. If you have to start small, do that. Don’t hold out and wait until you can afford big. And don’t listen to this bullshit that you shouldn’t buy at all.
Here’s the truth that the author is not telling you. It’s very simple. When you rent, you get nothing for your money. You get lodging and that’s it. When you own, you keep what you spend. People want to argue that housing doesn’t have a high rate of return on investment? Fuck them. It’s not supposed to. They say, what if you own a house for 10 years and sell it for what you paid for it, not gaining a cent? You fucking assholes, you gain all the equity in the property. All the money you paid into the loan (minus interest of course) is equity. You get that back. If you’re renting, what happens when you end your lease? What equity do you get from that? That’s “not gaining a cent”.
Then they can argue that property values can fall. Yes, this has happened once. Do I think it will happen again? Probably, but not as extreme as last time. But here’s the thing. You don’t lose money until you sell. I was underwater over $30k at one point. I kept making my mortgage payments and the property value eventually came back. And all the payments I made while it was underwater? Guess what? They still counted! Just like every other payment. It’s all equity. Stay the course!
So, you want to know why this fucking boomer wants you to keep renting? He’ll tell you right at the end of the article.
“The trend toward renting over owning should persist and may even increase. I continue to favor investments in rental apartments—assuming, of course, they meet the location, location, location test.”
So you better keep renting, if you know what’s good for you. And what’s good for you is very good for me.
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