Rent or Own

Home ownership hath its tired and grubby moments, as I've had time to meditate on over the last few days as a playroom to bedroom conversion project has dragged long over the expected timeline due to general holiday business (and perhaps laziness, but we'll ignore that). On the other hand, if we rented our house we doubtless wouldn't have the wood floors, the newly blue bedroom, the green kitchen, the red walled living room with finished wood trim, or the re-tiled (though admittedly still un-mantled) fireplace.

This morning I was reading over Megan McArdle's reaction to a New York Post column which pushes the benefits of renting over owning.

It strikes me that there are really two trends which make owning a house look less attractive to many people these days:

1) Perpetual Debt: A great many people seem to have no intention of ever paying off their mortgages and owning their homes outright. Mounting equity is taken as a sign that it's time to move to a more expensive house, or take out a second mortgage. At that point, I can see how home ownership would be unattractive. However, if you actively work towards the day when you own your house free and clear (and make that an absolute condition for retirement) then there are huge financial reasons to own.

2) Geographic Mobility: In certain layers of society, it's become increasingly common for people to move pretty regularly, not only in a region (from starter home to larger home) but from one region of the country to another as career changes demand. When you move frequently, especially due to circumstances that have nothing to do with your real estate finances, you're invariably going to get clobbered by regional market fluctuations and the costs of selling/buying a home, and if you tend toward 30-year-very-little-money-down mortgages, the clobbering can be very bad indeed.

These factors aside, I'm always a little perplexed by the "it's actually more economic to rent than own" arguments. While perfectly efficient markets don't exist, it still stands to reason that rent must generally be higher than the cost of buying an maintaining a house -- otherwise there would be no landlords because they'd all lose money. So unless there's some major difference between how you approach house buying versus how a landlord would do so (and holding a house for only a few years and taking out more debt whenever your equity builds would definitely count as acting differently from a landlord) it stands to reason that you'd spend less money buying than renting.