Time Magazine: The Case Against Homeownership – “I’ve done the math a bunch of times. The only way you make money owning your house is through the appreciation of its value.”

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“I’ve done the math a bunch of times. The only way you make money owning your house is through the appreciation of its value.” – Jon Belmonte, in the comments section of a Time magazine article, 26 Aug 2010 ‘The Case Against Homeownership’. Excerpt from the article – “Homeownership has let us down. For generations, Americans believed that owning a home was an axiomatic good. But the dark side of homeownership is now all too apparent.”

[How much longer can local Vancouver buyers convince themselves it is so substantially different here? – vreaa]

9 responses to “Time Magazine: The Case Against Homeownership – “I’ve done the math a bunch of times. The only way you make money owning your house is through the appreciation of its value.”

  1. vreaa, I don’t think you’ll reach many in your audience with this new paradigm. I’m sure most of your audience is simply looking to capitalise on cheap real estate.

    • maaaaat-> Thanks for the comment.
      What “new paradigm”?
      What “audience”?

      To clarify: we record stories relevant to the Vancouver RE bubble, we will continue to collect stories from the upcoming bust, and we add an occasional sprinkling of ‘this is the way we see it’ opinion (see ‘Predictions‘ sidebar, for instance).
      There is nothing ‘new’ about our fearful take on bubbles, but the way locals have lapped up RE for the last 5-10 years you can perhaps be excused for thinking there was.
      And we really don’t post anything with a particular ‘audience’ in mind; what you see here is simply what we judge to be relevant to the Vancouver RE market. We are pretty sure our audience is heterogeneous. Some folks may indeed be looking to buy RE at lower prices (and why not?); others are more concerned about the deleterious effects that this outrageous bubble has had on our society; some may be concerned about their future financial well-being; some may simply enjoy a good story. And there must be other kinds of readers, too. We welcome any who find the stories, and our angle on them, helpful or thought provoking.

      • vreaa, the paradigm I was referring to was that of real estate being a lousy ‘investment’, and that home ownership probably shouldn’t be so readily accepted as a social norm (as suggested by Time and several other writers in the past year and a half). By audience I am referring to the commenters on this blog who are mostly bears who are looking to purchase real estate when the price suits them. I am offering an observation and I am not insinuating you are writing this blog from any particular point of view. I don’t care what your motives are. I enjoy reading your blog very much and hope that you will continue to update it.

      • Okay, maaaaat, thanks, now I understand. I mistook which ‘paradigm’ you were referring to.
        I posted the Time cover largely because it’s interesting that the market in the US has become so distress that ownership is being vilified (as Snats comments, often a sign of at least an intermediate bottom in a market) while close by in Vancouver the general public hasn’t even begun to question the wisdom of ownership (perhaps we are seeing the very beginnings of that). So Vancouver is a long way off that ‘new paradigm’, even if it does ‘take’ in the US. As I suggested in the ‘Predictions’ post, the very last thing that will happen at the trough of our coming bust will be that ‘Housing (will be) Predominantly Valued As Shelter.’ We’ve still got a long way to go.

  2. Owning a home in most markets makes “economic sense” when it is cheaper than rental equivalence. For Vancouver detached, this is muddied because of expected density increases but the same principle generally applies when accounting for this.

    And yes I have no bones about wanting a cheap price. But I’ll settle for a fair price 😛

  3. Food for thought : if housing prices can defy normal trends and stay inflated for over a decade, can they defy the normal trend again on the way down and stay deflated for a number of years? I’m starting to think that there will be absolutely no rush to buy. The very concept of rushing to buy a house is gone now. I don’t see it coming back for a very long time.

  4. The covers of Time or Newsweek on the economy are classic countra-indicators down here in the States. This could mean we’re bottoming out or close to it. No such luck for Vancouver, I’m afraid.

  5. I must say I find this article late and gloomy now, especially compared to the Home Sweet Home article at the pinnacle. 2006: that’s when this article was most necessary and true. Houses in many American markets, while certainly not risk free, are of far better value with respect to housing fundamentals than they were at the peak.

    Yes, there are still a number of years of further price correction, and yes, it’d be nice to buy at the bottom of the trough, and yes, there are dangers if you’re forced to move in a falling market – and forced relocation might be more likely in recession.

    But still, if the mortgage is rent equivalent, and you can afford it and your plan is to be there for a long period of time, this is a better time to buy then at the peak in the States, so gloom-saying NOW doesn’t make any sense.

    TIME’s take on ‘buy low, sell high’ seems to be “pump high, kvetch low”.

  6. Here is a new peppy 1-minute video giving people advice on frugality and the responsible use of debit, ATM and credit cards.

    “Card Tricks Revealed: How Not To Burn Money”

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