Tom MacWright posted an interesting take on homeownership recently, arguing that owning a home is a) a bad investment, and b) a social ill. He also uses the post as an opportunity to muse on why homeownership is so aspirational to leftists in general, and puts forth a couple of ways that renting (as opposed to owning) could (and should!) be a better model for housing.

Full disclosure: I own a house.

When I first read the post, I had a sort of knee-jerk reaction to it: could I be part of the problem? I think I'm fairly left-leaning, and I try to live by example to others, even if no one's really looking; I know that I've benefited tremendously by the privilege of my position and upbringing, and I know that that privilege makes "living by example" problematic. But I haven't previously thought that my homeownership is, itself, problematic—and I think I still don't.

Another caveat here: a lot of the following argument centres on my experience of homeownership in the North East of England. I know that this isn't universal; I think it's applicability probably correlates inversely with your distance to a city centre.

First, I'm not convinced by Tom's economic argument, namely: that renting is a better use of your money than a mortgage is. Tom says that traditional, diversified investments will provide better returns than a mortgage will, and he's right on that front. But he's not taking the money that he would spend on housing, and putting it into investments, right? He still has to pay rent, and the return on rent is 0%. Homeowners still invest in index funds and ETFs and stuff. And while he's right that most people do overinvest in their mortgages, I'd rather overinvestment in a dubious asset than over-investment in an asset that becomes valueless the instant you invest.

I'm woefully underinterested in money in general, so I expect that there must be some financial math at play here that I just do not grasp.

Tom also writes that "housing is more of a financialized good than anything else", but I'm not sure I follow here. Housing is a basic necessity, which has been financialised as a means to turn need into money. I think I can see where he's coming from—housing is a good that most people co-purchase with banks and which is treated, in a high-altitude sense, as pure investments. Housing is a financialised good in the Big Short sense, but we're not talking about mortgage-backed securities here, we're talking about a person and a house. Calling something more of a financialised good than anything else only feels appropriate for goods that don't serve a practical purpose, regardless of what institutions you have to enter into agreements with to purchase: a house, car, or solar panels are investments, but in the meantime they also do stuff.

Maybe I'm nitpicking but it feels like the argument that homeownership is an unsound economic proposition sort of hinges on this kind of thinking.

The argument that homeownership is a social ill is a bit more of a pernicious one. Tom shares a graph showing how home owners lean more conservative than renters, which seems straightforward on the face of it—but I wonder if there's a third factor (like wealth) that correlates with the two. I.e. are homeowners more conservative? or are the wealthy more conservative, and wealthy people are more likely to own homes? I wonder if this is a worthwhile distinction to make—but the argument here is that homeownership, rather than wealth, is a social problem. I think the former is a slightly harder argument to make than the latter.

Ditto for the following arguments: that liberal homeowners are as opposed to more local housing as conservative ones, that public office is invariably held by homeowners. Are these specific to homeowners specifically, or the wealthy in general?

A couple points I do agree on: homeownership, especially in the United States, was founded on racist government policies—and the effects thereof are still at play today. Renting should be better. Homeownership should be less of a "sweet deal"; predatory practices around lending and buying should be legislated away. Public ownership would be an awesome middle-ground between outright ownership and rent.

Again, a lot of the above is anecdotal. This is my experience of homeownership in a corner of the world that's probably the exception rather than the rule. I'm glad that Tom pays less in rent in New York City than he would otherwise pay as an owner, and ownership almost certainly doesn't make sense in his position. But here in the North East—and throughout vast parts of Middle UK—renting is easily the more expensive option. We used to pay nearly twice our current mortgage for a tiny two-bedroom in Seaham; homeownership has legitimately saved us hundreds of pounds per month.

I wonder if the UK, or if Europe in general, just has a different renting culture to the United States. I wonder if, like Tom points out in his Caveats section, we're an "anecdote about great success."




2023 has been, maybe, my busiest year yet. Stacked to the gills with travel, new experiences, time spent outdoors, time spent in quiet pubs, time spent with Sam & Ghyll out in the wide world.


Poor Charlie's Almanack

Stripe's hosted version of Poor Charlie's Almanack is a vision of what digital books could be, instead of what we got, which kind of sucks.