In my last post, I was talking about our search for a new apartment. For the record, my motivation was that I hadn’t written much lately, so why not write about what I’ve been doing? I was not specifically trying to comment on the politics of housing.
But the politics of housing are surely relevant, and worth talking about–at the risk of repeating myself.
As I’ve said many times by now, my household is relatively wealthy. Plainly stated, we are millionaires. That’s not a brag, I simply think you deserve my honesty. Since around 2020, my husband and I have become tech workers without any dependents, debt, or expensive tastes–it’s a recipe for wealth. In our position, some people expect that we would buy a house. But we don’t want to become homeowners, and we are ideologically opposed to the expectation that we should.
This may not seem relevant to many people, because they couldn’t afford to buy a house even if they wanted to. Especially here in the SF Bay Area, homeownership is a privilege that few can afford. Nonetheless, even if homeownership is outside the realm of possibility, it’s a common aspiration.
Buying a house is what people tell themselves they would do if they weren’t forever in debt to the hypercapitalist dystopia. Leftists draw a dichotomy between renters and rent seekers—reinforcing the idea that homeowners are the winners. And whenever people talk about the wealth gap between boomers and millenials, it’s always about how millennials are unable to afford the houses that boomers were able to afford at the same age.
The complaints about wealth inequality are fully warranted. But I question the position of homeownership as the ultimate object of desire, the ideal path to the winning side of inequality.
Most people realize this, but buying a house means going into debt. You’re not buying the whole house upfront, not unless you’re far wealthier than we are. You pay an initial down payment, and then pay off the mortgage in monthly installments for the next few decades.
And it feels like a trick, you know? Imagine I were an evil moustache-twirling capitalist, and I wanted to keep the poor person down. So I tell them, “If you ever pay off your debts and earn enough money, you will eventually gain the privilege of buying a house. It’s everyone’s dream.” Then I rub my hands together with glee. “Oho, but you won’t actually own the house! You’ll be in debt all over again. So you have to keep on running in the rat race, just another thirty years to go!”
But I am being unfair to houses. After all, renting and debt are more or less equivalent, so you’re stuck either way. Homeownership is not necessarily worse for you compared to renting. It depends.
Homeownership vs renting
Whether you buy a house or rent, you end up making monthly payments. The difference is that rent is paid forever, while mortgage payments eventually end. Each time you make a payment on your mortgage, you gain a bit more equity in the house, until eventually you own the whole thing. In principle, all other things being equal, mortgage payments should be more expensive than rent, because you’re basically purchasing equity on top of making rent payments.
We know that in this world, the rich get richer, and that is the principle at play here. If you can afford extra payments on top of rent, then you can put those payments towards home equity. And eventually you gain enough equity that you no longer need to pay rent.
But if you have the extra money and want to use it to become richer, buying a house is not the only option available to you. You could, after all, just put that money into stocks.
There’s little reason to think that buying a house is a better investment than the stock market, and many reasons to think it’s worse. The generic investment advice is to diversify your portfolio. Don’t put all your eggs in one basket. Invest in many different things to mitigate risk. An investment in a house is a large investment in a single thing, exactly what you’re supposed to avoid doing.
Housing has generally gone up in value, but anyone who lived through the great recession knows this is not guaranteed. You’re exposing yourself to a lot of risk, not just in housing prices, but also inflation and interest rates. For example, if you take out a fixed interest rate mortgage, and federal interest rates go down, you must refinance or be stuck paying the higher interest rate. What’s worse, the house is highly illiquid. Meaning, there’s a lot of value in the house, but you do not have easy access to that value.
And what if you switch jobs? Must you filter your job search based on location? Or do you accept a long commute? Or go through the difficult process of selling?
Of course, renting comes with its own set of risks. Fluctuating prices, problematic landlords, and the possibility that you will suddenly be obliged to move.
What’s the financial advantage of buying a house? It commits you to investing little by little, month by month. That could be a psychological advantage if you struggle with commitment and would otherwise use the money less wisely.
I also understand the US has tax breaks. For homeowners, a very wealthy population. My political opinion is that these tax breaks should not exist.
Apart from all that, the kind of housing you can purchase tends to be different from the kind you can rent. You may prefer one over the other for a variety of reasons, despite any generic financial wisdom. For instance we don’t have a car or children, and that makes an apartment complex preferable to us. If you live in a place where houses are cheap and plentiful, that will tilt the playing field towards homeownership.
Ethical housing consumption
So we’re renters, but we can still afford nice things. That leads us to living in “luxury” apartments. And that leads, indirectly, to the construction of luxury apartments, and possibly the displacement of more affordable housing.
And we’re not exactly happy about that. I’ve already complained about what seems to go into a luxury apartment. Swimming pools and saunas instead of honest management. I think it’s a net evil for society that we allocate valuable residential space to swimming pools, while skimping on actually paying people. But apparently other residents want it that way.
However wasteful the amenities seem, at least it’s a five story building with everything crammed together. The swimming pools are split among hundreds of residents, so they’re not actually that large on a per-household basis. The “normal” suburban single-family residence is a lot more wasteful.
A question I often ask myself, what do the moderately wealthy owe to society? That is to say, what would the ideal moral actor do? Give all that money away? Make less money in the first place? And how much should we minimize consumption? Space is a finite resource; should the ideal moral actor strive to take up less of it?
The nasty thing about renting is how it disempowers you. So does debt, of course, but renters:
* Are at risk of displacement from their homes by landlords
* Are subjected to having strangers traipsing through their house during sales processes that in no way benefit them
* Are subject to landlords intruding into their homes, sometimes with minimal or no notice (depending on location)
* Accrue no equity despite paying off the owners mortgage for them (thus, either individually or collectively, paying more in rent than the mortgage each month)
* Are not able to decorate or otherwise change their homes to express their personalities and suit their needs
* Are restricted in terms of pets and activities they can carry out in their home
et cetera…
In addition, being displaced from your home also costs money that people may not have for deposits and so on. It might take years to recover financially from the setback. IMHO, while home ownership comes with a mountain of debt and a degree of risk, renters still have a worse deal, and they are still exposed to some of the risks of homeownership albeit through the proxy of their landlord.
Ah recently my husband and I decided to buy a home, here in Shanghai. Part of it was because I didn’t want to keep moving every 2ish years because of landlords’ whims, part of it is because now we have 2 kids so we will need a 3-bedroom (we were renting a 2-bedroom) but it’s hard to find a 3-bedroom to rent, part of it is because it’s such a pain to sign kids up for public school (and various other bureaucracy tasks) if you’re renting rather than a homeowner.
A few big differences between buying a home in China vs the US: In the US, typically the advice I’ve seen is to compare your current rent to what your mortgage would be if you bought a house, and they work out to be pretty similar. In China (or at least in Shanghai, which is more expensive than other cities) a mortgage costs *way more* than renting. Way more. Like maybe twice as much. But also most Chinese employees have a “housing fund” (公积金) that they have to pay into every month (it gets deducted from their salary) and their employer matches it (ie if you get 4000 rmb deducted from your salary to go into the housing fund, your employer also pays 4000 into your housing fund every month) and then that money can only be used for buying a home and paying the mortgage- so it’s a benefit that homeowners can access but renters can’t. (I’m oversimplifying it- renters can get some money out in some cases, but not all of it.)
Also in China when you rent an apartment, you’re renting from some individual landlord- it’s not like a whole building is owned by 1 landlord. (I guess in the US this is called a condo.) I know in the US there’s the concept that “this is the sort of home you would live in if you’re renting, and that is the sort of home you would live in if you owned it” but that’s not the case in China- some of our neighbors in this apartment building own their apartments and some are renting from some other individual person who owns the apartment. So it’s very common that people buy an apartment “as an investment” and rent it out, or don’t rent it out and just let it sit there “as an investment” because the money you would get from the rent isn’t anywhere close to being able to pay the mortgage so why bother. I think this is a bad idea because sure Shanghai has had a big housing bubble and the prices have been going up, but recently the prices have gone down somewhat, so it’s too risky to be “an investment.” (And there are laws limiting how many apartments people can buy, and also you have to have a Shanghai hukou or live in Shanghai- this is to prevent all the rich people from buying all the apartments and then just letting them sit there “as an investment.”)
Also there’s some gender-role nonsense, like a man is expected to own an apartment or else he’s not marriage material. Why would any woman marry a man who doesn’t own an apartment, eww. But what this actually looks like is that the man’s parents spend all their savings to buy him an apartment so he can get married- and in Shanghai housing is so expensive so probably his girlfriend and her family would also contribute money to it anyway. Anyway my husband I didn’t participate in any of that.
agreed with comment at one. just got the condo after a life of renting and it’s risky as hell but the rates go up slower than rent right now. the scumbag property management companies come up with a million angles to hit you from. construction quality in anything short of a luxury apartment is egregious. i can’t believe i found a place in wa state with central ac, it’s like shangri-la, whatever the issues.
I totally agree that people oversimplify this comparison. Aside from the flaws in treating it as a financial investment, the idea that you get to live in your house for free after your mortgage is paid off is an illusion. You’re still fully on the hook for maintenance, plus the insurance fees and property taxes never stop.
On the plus side for owning a home, there is something satisfying about being able to change your home however you see fit, in ways that might dramatically improve your quality of life. If you rent, you’re more restricted if you don’t like something, but it’s also easier to move somewhere else if it becomes intolerable.
We bought a house nine years ago and don’t regret it but I fully appreciate the pros and cons of renting and owning. I think few people really consider them thoroughly.
I live in the midwest, around the Chicago suburbs. I moved into a house in January of 2025 from an apartment I’d been renting for about 9 years. I had several apartments before that one so I’m quite familiar with renting and still kind of new to homeownership.
As far as renting goes I would say about half of the list in #1 has affected me to some significant degree or other. And in addition, I would add some other points.
* Can’t have friends who are down on their luck stay for a bit unless they’re only there for 2 weeks or less. I’ve been on both ends of this muiltiple times although I understand it’s rare for most other people.
* However good your landowner and/or management company are when you move in, they can change entirely and you won’t have any say in it. In fact, you’ll still be on the hook for your lease terms even if the new owners just want to immediately extract money from you and the property.
* I am not a lawyer but the advice I’ve heard is that you need to keep paying on your lease even if the landlord isn’t keeping up with their obligations. Until a court tells you that you can stop paying, my understanding is that you are in a much worse legal situation if you don’t keep the rent checks coming. This may incude times when your apartment is unlivable. Get real legal advice from a lawyer BEFORE you decide to stop paying on a lease, no matter how absurd the circumstances are.
* New schemes are common. While I was renting those last 9 years I saw RealPage come into common use and a renter’s insurance scam go mainstream. The former you can look up, there were news stories. The latter is you funding your landlord’s property insurance so they don’t have to. You take out insurance that ONLY pays the landlord in case something happens to your apartment building. You can’t refuse, it’s part of the lease. New schemes will definitely surface over time and you’ll be paying for them.
As far as being a homeowner I have definitely had some things I had to sink money into. My house wasn’t quite a fixer-upper in that nothing was exactly broken. But a LOT of the standard maintenance you’d do over time had come up and needed to be taken care of. Some of the maintenance and repairs I paid for were a new roof, electric work, new well pump, whole house water filter, new sump pump, some plumbing work, and retrofitting the house with heat pump heating/AC. That definitely cost some money and it wasn’t even everthing. But aside from the water filter those are all things that I won’t have to touch again (or at least spend money on) for quite a few years. The downside is that I think if I’d asked my realtor for advice he would have told me not to spend so much right away. But I don’t plan on moving again unless a tornado picks this place up lands it on some randomly directional wicked witch.
What I found VERY interesting was comparing what my old apartment is going for today vs my mortgage payments. It’s been less than 2 years and my rent would already be 10% more than my mortgage payment is. That was frankly astonishing. Before I bought my house I looked at the previous years of rent hikes and concluded that it might take 4 years to break even. Instead, it’s happened in less than 2 years. My house is about twice the size of my apartment so it has higher utility costs. Making some rough assumptions I think I’m paying about as much in ongoing costs now as I would’ve been had I continued renting. That kind of floored me. I’ll have to check again in a couple years to see where things actually end up.
Brief side note: My house is on the edge of a small town. I don’t even pretend it’d be suitable for Siggy’s family or anyone else’s in particular. There’s a bus stop nearby if you’re willing to walk a mile. But I have a couple acres, most of it zero maintenance woodland. And good internet. The only real challenges have been extended storm-based electrical outages. The water kind of sucks so that’s an added cost to deal with but it’s very predictable, so not much of a challenge.