From the archive: Should you rent or buy your home?
Home ownership is not the financially optimal choice
Editor’s note: I’m back to my regular personal finance commentary after a brief diversion into the madness overtaking our nation.
However, I must add one final thought that has disgusted me even more about the world in which we find ourselves at this moment.
Apparently, pro-Israel groups are taking credit for collaborating with our ICE shock troops to deport these troublemakers, to some godforsaken shtetl, after a stay in a Louisiana concentration camp. Surely, the irony cannot be lost on anyone.
They’ve compiled lists of thousands of students and professors, many of whom are US citizens, others who are foreign nationals, who they claim have participated in anti-Semitic speech or behavior…
After Tufts graduate student Rümeysa Öztürk was apprehended Tuesday evening, the 100-year-old Zionist organization Betar US said it had handed the government her name.
“She was on our list,” the organization posted on the social media platform X, with a video of Öztürk’s arrest on the streets of Somerville. The group said it would submit the names of 1,800 more people next week…
On that cheery note, back to real estate…
It seems deeply engrained in the American psyche that home ownership is the financially responsible and low-risk path to wealth creation. I get it — you can touch real estate, sleep in it, fence it, expand it, rent it, and it’s mostly unaffected by Trump’s whims.
This question comes up so often that I thought it was time to re-up what I wrote a couple of years ago on this topic.
TL;DR: it’s a meh investment with some tail risk (think floods, hurricanes, fires, condo collapses). Not the worst thing you can do with your money but also not the best.
To be clear, I see nothing wrong with owning one’s home (I own mine) but recognize you’re doing it for non-financial reasons. If your goal is to maximize your lifetime wealth creation, you’ll do better if you rent and invest the savings in an index fund.
My view isn’t universally shared; read the full version and decide for yourself:
Great and pithy writing, as usual. Thanks.
I'm so happy to see that you are still writing. I really enjoy your newsletter when it comes. A bright spot in all the madness!