Renting Or Buying: Which Is More Grown Up?

We’re about to move.

We just got notice from our landlord that we have 60 days to vacate our home. And among the many things we’ve had to contemplate on short notice is whether or not we want to continue to rent or go ahead and buy.

I’ll cut to the chase and reveal that it looks like we’re going to be renting our next flat (which – in an act I can only attribute to God or Karma or both – we may have miraculously already found, the very day that we got kicked out!) But for a brief moment over the weekend- 48 hours or so – we thought seriously about buying.

I’ve written before in this space about how I find safety in movement. For me, buying a house falls into a long list of things – jobs…careers…continents – which make me feel trapped, and from which I instinctively flee.

So I was heartened when renowned Yale economist Robert Shiller gave me an out from forcing myself to confront my commitment-phobia in a column that he wrote for the New York Times last week. Shiller points out that the United States government has been subsidizing home ownership for decades. And it has done so largely for cultural reasons:  for many Americans, owning a home is intimately bound up with our notions of citizenship. Home ownership is the very embodiment of individual liberty, whereas renting has been linked (culturally) with the oppression of the landlord.

Shiller wants to suggest that this American attachment to owning a home needs to end. Financial theory tells us that people should diversify their assets, rather than dumping them all in one place (a home). And by encouraging people to take a leveraged position in the real estate market at all costs, mortgage institutions have encouraged this culturally rational – but economically irrational – practice. And we all know where that got us. (Thank you, sub-prime mortgage crisis.) (For an interesting perspective that argues the exact opposite, see this article in Forbes.)

Shiller’s bottom line, then, is that we should re-think the idea of renting because it might make more sense for the majority of Americans. He gives Switzerland as an example of a country that has re-jiggered its housing finance institutions in the direction of rentals without sacrificing national pride.

Shiller isn’t framing it this way, but another way to put what he’s saying is that in the present economic climate, it may actually be more grown-up to rent, rather than to buy. Which is the exact opposite of how we normally think about this issue.

To which I say: Amen. When can I sign the lease?

*****

Yesterday, I was over on PoliticsDaily.com talking about the never-ending War In Iraq and its ongoing political and cultural legacy.Have a look.

Image: For Rent – Reduced??!! by Kelly Sims via Flickr under a Creative Commons License.

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9 Comments
  • Reply Daryl Boylan

    March 9, 2010, 8:48 pm

    Go for it! Go go go! Nothing like a get-out -fast notice from one’s landlord to give the needed push — congratulations. As to rent v. buy, there are probably as many variables as there are prospective renters & buyers.

  • Reply Eva

    March 9, 2010, 10:37 pm

    Delia, I think it’s so funny how some people find safety in movement (you!) and others safety in staying put (me!). Different interpretations of stability, I think.

    I agree with the argument that our government’s subsidization of home ownership should be evaluated. The “American Dream” may be different now, and in an increasingly mobile society it might not make sense to own a home. It seems there is a place for both owners and renters in our economy – and it might have been a good thing to have more renters in recent years.

    Good luck with your big move! (Do you read Aidan over at http://www.ivyleagueinsecurities.com ? She posted yesterday on moving, leaving a beloved home behind.)

  • Reply delialloyd

    March 10, 2010, 6:27 am

    thanks eva. re: aidan-see today’s post!

  • Reply rachel

    March 10, 2010, 12:35 pm

    Thanks Delia – I was feeling like an economic failure as I have to sell and return to renting – now I see I’m just diversifying my assets! Rachel

  • Reply Shelley

    March 10, 2010, 1:19 pm

    I just scanned the Forbes article, but it struck me as almost a left (rent) vs right (own) argument. I think the sensible thing is about how much of your income you pour into owning. I haven’t bought many houses, but the ones I have I’ve tried to keep (as rental property) when I moved away. I’ve not bought the most expensive places I could qualify for, but what I thought was a middle approach to best value for money. I doubt I would ever sell to buy ‘bigger and better’ in the same area the most people seem to. I’m content where I am. However, I think it is wonderful that you see safety in change. I can’t imagine owning in London – far too expensive for most or they spend their hours commuting. I would rent if I lived (not likely) there.

    Enjoy nesting in your new space!

  • Reply delialloyd

    March 10, 2010, 2:37 pm

    hi shelley. very much agree on your assessment of the Forbes article but I wanted to include a different point of view. I agree that this is ultimately an economic decision – not a cultural/political one – but I think Shiller is right that for many of us, at lst in America, other things enter in. Thanks for your spirited and engaged response!

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