I largely agree with other commenters, but want to put some of these points in my own words.
The comparisons at the beginning of the post don’t make sense.
I would prefer to buy shoes rather than make all of my own shoes, because the cost of learning to make shoes, getting the necessary equipment, and taking the time to make them is too high. (Maybe it would be fun. But, even if I decided to do this as a hobby, I couldn’t simultaneously make all my own clothing, glasses, food, etc etc.)
However, a house is not like this. The analogous argument seems to be: I would not want to build my own house by hand. It would take too much of my time and money to obtain the necessary expertise and equipment.
Renting a house, on the other hand, is kind of like renting shoes. I would prefer to own them. Why should I pay a middle-man (a “shoelord”) a regular fee, when they add little of value? Yes, maybe they provide for my shoe repairs and new shoelaces. But I could do that myself just as easily!
Renting has downsides you underestimate.
Imagine renting shoes from a shoelord who is responsible for shoelaces and shoe repairs. The shoelord’s incentives point to finding the cheapest laces and repairs, with no regard to your personal convenience. Every time you need a shoe repair, you have to fight the shoelord about whether it’s necessary or frivolous.
Landlords and tenants do not have aligned incentives. Renting means giving up a lot of your power to optimize your environment to your liking, and handing it over to someone whose incentives are not aligned.
Renting can’t be sustainably cheaper than owning.
Unless I’m making some big mistake here, renting has to be at least a bit more expensive than owning, because otherwise landlords wouldn’t buy places to rent out. Being a landlord would not make financial sense.
In the post, you compare buying a house to putting money on the stock market. But your comparison should be renting vs buying. If I make rent for years, I own nothing in the end. If I make housing payments for years, I own something in the end. I need a place to live either way—I don’t want to put my money into investments and just live on the streets.
Agreed with all, but it’s worth noting that “renting has to be at least a bit more expensive than owning” is true only on average over long time periods. These particular markets are imperfect, distorted by legal/tax weirdness, and fairly opaque. So there are almost certainly periods of many years in many locations, where renting is cheaper than owning. But that requires specific analysis, not a general pro or con.
I largely agree with other commenters, but want to put some of these points in my own words.
The comparisons at the beginning of the post don’t make sense.
I would prefer to buy shoes rather than make all of my own shoes, because the cost of learning to make shoes, getting the necessary equipment, and taking the time to make them is too high. (Maybe it would be fun. But, even if I decided to do this as a hobby, I couldn’t simultaneously make all my own clothing, glasses, food, etc etc.)
However, a house is not like this. The analogous argument seems to be: I would not want to build my own house by hand. It would take too much of my time and money to obtain the necessary expertise and equipment.
Renting a house, on the other hand, is kind of like renting shoes. I would prefer to own them. Why should I pay a middle-man (a “shoelord”) a regular fee, when they add little of value? Yes, maybe they provide for my shoe repairs and new shoelaces. But I could do that myself just as easily!
Renting has downsides you underestimate.
Imagine renting shoes from a shoelord who is responsible for shoelaces and shoe repairs. The shoelord’s incentives point to finding the cheapest laces and repairs, with no regard to your personal convenience. Every time you need a shoe repair, you have to fight the shoelord about whether it’s necessary or frivolous.
Landlords and tenants do not have aligned incentives. Renting means giving up a lot of your power to optimize your environment to your liking, and handing it over to someone whose incentives are not aligned.
Renting can’t be sustainably cheaper than owning.
Unless I’m making some big mistake here, renting has to be at least a bit more expensive than owning, because otherwise landlords wouldn’t buy places to rent out. Being a landlord would not make financial sense.
In the post, you compare buying a house to putting money on the stock market. But your comparison should be renting vs buying. If I make rent for years, I own nothing in the end. If I make housing payments for years, I own something in the end. I need a place to live either way—I don’t want to put my money into investments and just live on the streets.
Agreed with all, but it’s worth noting that “renting has to be at least a bit more expensive than owning” is true only on average over long time periods. These particular markets are imperfect, distorted by legal/tax weirdness, and fairly opaque. So there are almost certainly periods of many years in many locations, where renting is cheaper than owning. But that requires specific analysis, not a general pro or con.