How an obsession with home ownership can ruin the economy | The Economist

100 Replies to “How an obsession with home ownership can ruin the economy | The Economist

  1. FWIW this Swiss example seemed so remarkable to me so I started trying to research it. I couldn't find a lot of info to confirm the thesis of this video. It seems housing in Switzerland has been extraordinarily expensive for a long time and that's why people rent. That's also why their housing prices have increased relatively little… they were starting from a higher price to begin with. People rent for 20 years because the price-to-rent ratio is high, meaning that's a rational thing to do. There is, of course, a shortage of affordable housing just like everywhere else.
    We all know housing prices are messed up but as per the usual, the Economist has managed to make a dishonest argument for something, in this case defending the feudal privilege of landlords.

  2. 6:00 so the difference between homeowners and landlords wrt policies is that landlords are assumed to vote in a different jurisdiction than the properties they own? And renters would therefore be able to vote against their landlords interests and in favour of higher density new construction…
    That all seems similar to the fallacy of the rational consumer. Or assuming a form of democracy that disaggregates issues to a greater extent than anything I've heard of…

  3. The people commenting here should firstly really read their special edition on the matter, the majority of questions and concerns are answered there. Secondly, they are not suggesting that YOU should not buy a home, rather that the state should not attempt to ensure that you own one. By doing so, the government is in effect making it harder for people to access and own homes for a variety of reasons. Like I said, read the link in the description instead of being armchair experts.

  4. 1st rule of being rich, see you're home as a libility, and a house you own and Rent out as a working assist, just learn money people

  5. Mortgage payment is a form of forced savings. The higher disposable income available to a renter is easily spent away. Over the course of a typical mortgage tenor of 25 to 30 years, that can equate to a lot of unnecessary spending down the drain.

  6. Any sixth former could do a better job than this, completely ridiculous analysis with the flimsiest evidence supporting it. How on earth can you argue that because Singapore and Romania have similar rates of home ownership but different levels of development, that proves that home ownership doesn’t equate to a more stable economies? That tells you precisely nothing except that they are different economies.

  7. So, banks are just a collection of people operating as a company, right, so these people are sanctioned by the gub'ment to issue loans, where do the loans come from? Thin air, yep, it's the mortgage itself that's collateralized from which the money is created …..again, out of thin air, why is that important? Because YOU, you have to work 30 odd years to make the money to afford the mortgage payments, THEM? They sit and collect something conjured out of THIN AIR …..and what I say is how it works, does this seem right to you?

  8. I bought a cheap house. Paid it off in 4 years. I keep my bills so low i could pay them working at mcdonalds. Renting is a large never ending bill. The problem is greed, people want to live lives they cant afford. I would rather have money in the bank and know that i will never be homeless.

  9. Paying a mortgage and the other costs that come with a owning a house isn't just isn't just about which is the cheaper option, it's also an investment in your future, and about building generational wealth. Paying rent doesn't invest in anything except your next nights sleep.

  10. I stopped reading The Economist when I started actually understanding economics. They are a soundboard for progressive idiocy and have been so for too long. Wish some true liberals (aka libertarians) would take over and bring back the civil discourse.

  11. Careful, you relate a change in policy that increases home ownership to the Great Recession and the next thing you know everyone says you’re blaming the end of redlining for the recession.

  12. Yeah exactly in fact let's just never own anything even the clothes on our back, let's rent water from Hershey's and pay an oxygen tax too while we're at it.

  13. So it was not the large scale fraud within poorly regulated financial industry but people’s obsession with home ownership that caused the 2008 financial crisis…

    Now I am wondering what other, less obvious BS was published by Economist over the years.

  14. The rent is so expensive in Switzerland and the real estate agency has too much power. The only way to protect yourself here is to hire a lawyer. Or buy your own house!

  15. I’m not sure I approve of this message. Even if you buy an apartment/condo, you’ll be better off in 30 years when it’s paid off. After all it will then be a true asset. Your property is your piggy bank. An apartment is a black hole for your money.

  16. People are seduced into buying (via huge loan known as mortgage) homes that will take half their lives or more to pay off.

    Not to mention the inability to maneuver if and when things go awry. Let's not even mention being enslaved to a job you probably don't like for fear of not wanting to risk going elsewhere.

    Add it all up, and homeownership is simply a bad idea for majority.

    They want people to own homes, make them affordable by removing all the ways in which banks and other lending institutions can play with money (aka finance).

    General rule, a home should cost no more than 2 times the average salary in a given area. This will make home ownership attractive and affordable again and owners will actually be able to own it out right way before their death bed. 😶

  17. Its natural to want to own a piece of property, its a great idea to buy your own house, I cant imagine living your entire life, renting.

  18. Its not just cost, its having to move your family whenever the landlord wants you to, now your kids have to readjust to a new house, a new school, and the entire moving ordeal is humiliating. I would always prefer buying over renting, there is no question, renting is ok for couples or a single person, not families. I plan to leave my house to my wife, and kids.

  19. in germany, austria and switzerland, the three countries with the lowest home ownership rates within the oecd, we dont need houses to secure ourselfes because we have a social state

  20. The economist is trying to push this narrative to keep people renting so major management companies can keep making money from tenants

  21. My next door neighbor said he bought his house for $75000 back in 50 years ago, now his house is worth almost $700.000. Owing a house in the state, at least in southern California means it's an investment guarantee a gain or just have your money offset the inflation

  22. i think you really need to own a house (not necessary the one you live in, but just to own one) because it is your safety net when you get older. in Japan older people are having problem finding places to rent because owners are afraid of people dying alone in those houses (kodokushi). in Ireland even if you are earning enough, you will find it very hard to find a place to rend because of the housing shortage. i bet none of the people in those countries thought they will be having such problem when they were young.

  23. The documentary should also stress the importance of laws that protect the renter. Having a high renters rate is not enough to solve the problem if there is not enough protection. Also too much protection could discourage investment in properties for rent. Balance is always the key.

  24. In America, it's a better deal as interest rates are fixed. Considering your rent goes up 5% a year and 10% a thriving city…the buying makes more sense. Even with 2% income appreciating buying makes more sense as your mortgage becomes a smaller portion of your income.

  25. You can only have stronger home ownership if the jobs themselves are secure enough, which at present most jobs are not. Additionally, it only works if the underlying original price is affordable no more than 20% to 25% of take home pay with a savings of about 5% to 10% of take home pay on upkeep costs and insurance premiums; for a combined 25% to 35% of take home pay; and that it can be paid off within 10 to 20 years; as the advantage of buying is that at some point only pay upkeep and insurance than renting.
    And renting needs to be stable as it's not either, landlords are able to charge well beyond 35% to 55% of net take home pay is unsustainable.
    Appropriate housing expenses is 20% to 35% of take home pay with that sliding scale changing on the amount of yearly income starting at $20,000 gross income than no more than 20% of take home pay to $200,000 topping at 35%.
    Beyond $2 million annual income secured for 10 to 20 years the scale is no longer meaningful; you could spend 50% on housing and still have vast sums left for savings and other things to change course and rectify back to the scale of lesser income.
    But literally only the top 0.1% make incomes at that amount.

    Thing about making a society of renters is fine, but then you must have subsidies in producing more units to meet demand as well as limits on pricing to both meet pricing for demand and units supplied.
    Huge housing subsidies is the reason most people world wide adopted the "middle class" affluence; either in renting or owning. Loss of such subsidies such as taxes actually used in construction of houses and utilities: sewer and water and electricity etc. has now been passed on to developers and added to the unit price. And this effects both owners and renters alike.

  26. They've probably botted the like/dislike counter on this one.
    Can't find a single positive comment about this video and any of it's points, yet it has so many likes.

  27. America needs rental laws. My “low income” apartment went up so much I had to move. I payed $650 in 2012. By 2019 my payments were $980. My financial situation never changed since I have small children.

  28. Invest you dumb ducks. Don't own , don't rent, invest. Get dome roommates to minimize rent, Put every dollar you make in your pocket and start investing in real estate and be the guy that takes the rent. When the home owners decline the renters increase! Also homeowners didn't start the 2008 crisis. The banks lowered the interest rate and they gave a load to every monkey without money and without any guarantees and then they made those dogstits CDO stuff, made 100 times more money and created the Armageddon called the 2008 crisis. I am not the Economist but i am certainly more honest than you guys.

  29. Home ownership is essentially an investment…invest wisely and you can recoup this gain via the equity in your home but in regard to renting, YOU are the investment for the person/company that owns the property in which you are renting. So..invest in yourself and stop making others rich.

  30. Surely you have to take into consideration the fact that you have an asset at the end of your life to either pass on or spend. I accept that the price of renting is affected by demand and availability. Which is why local government should be allowed to build houses for rent.

  31. That is exactly what Chinese people want, owing a home no matter what. Co's if you can't provide a celling over your family, girls won't marry you.

  32. The UK Treasury released a paper saying renting is three times more expensive over the course of your lifetime. Seems at odds with claims in this video.

  33. A house you live in using a loan is not your house, it belongs to the lender.
    Tax deduction from this kind of interest is more or less a transfer to either the sellers or the lenders, depending how much it raises competitive prices.
    If the price increase fully compensates what the buyer would otherwise have saved, all that happens is, the sellers get more money.

    Anyways, don't take loans on things that can't pay themselves off unless you plan on dying before payback is due.

  34. In Switzerland people rent because they cannot afford their own property. In Geneva a 60m2 appartment cost between 800000 – 1000000 CHF with an average income of 5-7k CHF /month.

  35. Yes, all in this video is true… but let's not forget to mention the huge input from the banks. Lots of easy borrowed money from the far east = banks having all this capital to play with, and ultimately issuing as many mortgages as possible.

  36. Most places have more than enough space for everyone, maybe not the really big cities, but there is space and resources, it all comes down to regulations and politics. I could buy a piece of land right now and build a house with my own hands, but it just doesn't work like that, others will try to stop me, governments or otherwise, we humans just don't care about each other 🙁

  37. My parents purchased a home in the 50”s for $28 grand they worked 14 hours 6 days a week as blue collar labor, mom sew cloths in sweat shop…

    Sold the house last year for $375 grand
    Grandkids attend medical school and that is the Americans dream …. prepare the next generation with working with your brain…. it pays well and any bank will lend you money…

  38. No word on Canada! The government mostly intervene to prevent people to buy more than they can afford. That's pretty much it. And it kinda works 🙂

  39. In the US, mortgage interest deduction is no longer useful for most people because it is less than the new standard deduction.

  40. Property investment friendly policies and immigration in Australia caused a huge bubble with prices,so that most people paying the resulting high mortgage or rents have little disposable income left over to spend on other things – as a result,many retailers have suffered and the economy has lingered in a state of chronic near recession.

  41. Owning property gives your children a potential headstart with transferring wealth. When your are childless and are planning to stay that way you might aswell rent.

  42. The best decision ever people will do In their lives is buying a home .
    And yeah it's not fair only the rich ppl can get everything .

  43. Ownership puts you in control but has more restrictions on your ability to move. Renting in America puts your landlord in control, nobody wants that long term.

  44. Switzerland sounds like an amazing place. If the UK was like that I would put far more effort into being an entrepreneur, (developing, learning, applying new skills, marketing and selling products and services) rather than acquiring more housing as a landlord.

    If there is a time where the UK housing market is no longer profitable I'd like to spend a little time in Switzerland to see if I can bring something great back.

  45. Home ownership isn’t the problem, it’s when one person owns 6 houses, such as my landlord, and rents them out for their personal income that makes the economy and housing market suffer.

  46. if renting and buying cost ruffly the same the buying is better . You own that stuff then . You get a Value other then just lifing there .

  47. Again greed makes the house more expensive preventing new construction. Regulate the housing markets to stop the greedy renters.

  48. Renting should be illegal and owning more than one home illegal as well. One family per home. There are more homes in the US than there are families and many of the homes are vacant just increasing the housing prices. When they throw a billion dollars into the housing market the prices increase and then they are like renting is safer. Yeah safer for you.

  49. Where are we supposed to live? On the street?

    Also, people say that rent shouldn't be more than 30% of your income.
    $500/month rent, with a $350 paycheck makes zero sense.

    And let's not forget Hostile Work Environments, causing job-instability (and high turn-over).
    But, that's another story.

  50. I bought my home 12 years ago for £230,000, worth £750,000 now. My mortgage is £350p/m. If I was paying rent it would be £2100p/m for my 3 bed semi in london. It was definitely better for me to have bought but in the current market I don’t understand how a young family could even hope to get a mortgage in the current market.

  51. why so much emphasis in the docu on the US Market and home ownership there? what about France or Greece or Chile which have similar statistics to the US. It seems the researchers are primarily interested in the english speaking world. shame really for otherwise a fascinating report

  52. The most basic reason to seek home ownership? You're going to get old. And when you do…if you have paid off your home and you only have to pay the taxes on it and the upkeep…that will be a vert nice benefit in retirement.

    If you have to pay rising rents for….FOREVER…that can be very bad for you in retirement. In fact…it LIKELY will be bad for you.

  53. Best thing to do is buy a home, make one floor a flat and rent out each room to offset the mortgage payment/interest payments.

Leave a Reply

Your email address will not be published. Required fields are marked *