Owning a home is a huge part of the American Dream. But is the dream of homeownership really all it’s cracked up to be? In this new Econ Duel from Marginal
Owning a home is a huge part of the American Dream. But is the dream of homeownership really all it’s cracked up to be?
In this new Econ Duel from Marginal Revolution University, Professors Tyler Cowen and Alex Tabarrok weigh in on the issue. Each representing a side of the home ownership debate, the two professors ask what’s smarter—to rent, or to buy?
On the “buy” side, Tyler Cowen shares the tax advantages of buying a home as well as the effect homeownership has on one’s stability and savings regimen. Does buying a home force us into better savings habits?
Against those arguments, we have Alex Tabarrok, coming down on the “rent” side of the equation.
Among other points, he talks about the real beneficiary of tax breaks (hint: It may not be you!). Along with that, Alex tackles the trials and tribulations of home-buying, in places like San Francisco, New York, or Boston, where a combination of scarce building permits and increased demand drive up home prices. Plus, doesn’t owning a home -- and committing a 20% down payment -- break the diversification rule of good investing?
All that said, though, here’s the real question that matters—which side are YOU on? Watch and let us know in the comments!
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1. A long term private investment that extends to more than one generation might make the next generation less able and less productive.
2. Buying home slows the economy for generations. When one plans to buy home, he/she has to save lot of money or take lot of money in loan. The money which he/she could have spent/invest in other productive sector.
3. Buying home is a big investment. So a big amount of investment is route to a single entity, which would not spend that huge money effectively and might not contribute much in economic growth. Whereas if the person lives in a rent, small amount of money is spent on rent and rest will be used in various others places (more than one place) and will drive the economy faster.
4. When one spends in home, he is making a long term investment and his next generation will already have home to stay i.e. the next generation does not need to work and think more for home. Darwin's "Survival of the fittest" works here too. The next generation does need to make itself fit enough to survive and this leads other people to get smarter and fitter. Some gets unfit but still survive while others get fitter and survive.
5. How about government/state/PPP (public private partnership) renting home? Yes for this political and social system should be stable and education system should be equally reachable and affordable for all. Then everyone will have level playing field and survival of fittest will evolve in its truest sense.