Monday, March 9, 2009
The Universe Does Not Exist to Comfort Homeowners
My dad pointed this out from the Yahoos. Seeing more pieces like this floating around. Hough's article is better than most, and his #5 ("Neighborhoods are changing in unpredictable ways") is a very under-appreciated reason for praising renting over buying. Depending on the source, the typical homeowner might have anywhere from 30-80% of their net worth tied up in their home. This is madness. Talk about lack of investment diversification ... sixty, maybe eighty cents for each dollar of a person's life, tied up for decades in one home in one neighborhood. For a generation, and probably longer, personal-finance gurus have railed against individual people buying and selling individual stocks or behind too heavily weighted in any one investment, etc. And this whole time public policy and culture have encouraged people, most of whom have the financial sophistication of Pez dispensers, to not only make a massive thirty-year investment in one asset, but to borrow money to do it.