Your House Is A Big Fridge – “Do you plan to sell your fridge in 20 years and retire on it? No, it’s a fridge, you store things in there.”

“Over at York University’s Schulich School of Business, finance prof Moshe Milevsky also believes that too much is sometimes made of owning a home.
“The way I look at it is, I tell people your house is a big fridge,” Milevsky says. “Are you romantically attached to your fridge? Do you plan to sell your fridge in 20 years and retire on it? No, it’s a fridge, you store things in there.
“It’s a place to live. We need it. You enjoy the benefits of it, backyard and so on, but it has to be done in perspective.” Milevsky feels there has been a serious rethink now, especially in light of the U.S. housing crash six years ago, over whether home ownership makes sense for a mobile workforce that has to deal with fluctuating property values.
“If you’re in your 20s or 30s, not sure what you’re going to be doing for a living, and your job is relatively risky, the last thing you want to do is pile on risk,” Milevsky suggests.
“But if you’re a 42-year-old teacher, have two kids, and your husband has a secure job for some government agency and you know you’ll be here for next 25 years, OK, maybe home ownership makes sense because your personal balance sheet is a lot safer, it’s a lot more secure.
“It has to be viewed as a portfolio transaction.”

– from ‘Should we stop encouraging home ownership?’, Mark Gollum, CBC News, 24 Sep 2012

From the comment section of the same article:
“Well, there is no way I’m ever going to take or listen to the advice of someone who equates home ownership with fridge ownership. My fridge is like a car: it wears out and I replace it. I make enhancements to my home, I better it, and its value rises. We are in a very sad state if the “experts” are advising that home ownership is not a good investment. The issue isn’t owning a home, it’s making sure you purchase a home that is affordable to you. Why these ongoing attempts to destroy the middle class?”
– keeper100, ibid

We agree completely with Moshe Milevsky’s comparison.
In coming years, Canadians (and especially Vancouverites) will learn to treat their homes more like fridges, and less like financial instruments.
– vreaa

The entire CBC article is worth the read. Some very sensible comments, as always, from Ben Rabidoux (“We’re asking taxpayers to basically take on the risk to allow people to jump into ownership with the risk being held by somebody else. And I’m not sure that’s sound policy.”)
Also, the poll on the same page is of interest. It currently shows 40% saying “home ownership is an important part of Canadian life”, vs 39% saying “home ownership is not a right. Renting is a fine alternative.”

17 responses to “Your House Is A Big Fridge – “Do you plan to sell your fridge in 20 years and retire on it? No, it’s a fridge, you store things in there.”

  1. Y U try to destroy the middle class?

    Hahahaha Now I know there’s a bubble.

  2. … neofascists consolidate power after middle class destroyed by big fridge rhetoric

    • “neofascists consolidate power after middle class destroyed by big fridge rhetoric”

      What paranoid crap!!
      The guy is just trying to make a point about homes not being viewed solely as investments or ATMs

      • 🙂 dude … first, relax … time will tell … but i have message from the post-bubble housing bubble world (which is pretty much everywhere else): prices will come back some but things don’t get better … i know people like to think about RE only and this bubble is some sort of isolated event that will pass and we all get back to sort of normal … otoh if you’ve been studying it carefully, you’d know it’s just a symptom of a something much nastier … look to eu for a 1st world preview … and we haven’t even got to pt where the inflation trade comes back big time … i’ll gladly be proven a kooky doomster … but if not, maybe you’ll be glad to have caught on a bit sooner

      • BigFridge, LittleFridge… ChinaFridge, GermanFridge…. Far too late for “chill” apparently as things HeatUp uncontrollably in the SinoTeutonic… 冰箱大戰!

        [NoteToEd: Not surprisingly, those ChineseBloggers were particularly incensed upon discovering that not only had their Siemens’ refrigerators been shipped with a deadly variant of the StuxNet virus… but that slamming the freezer compartment door on some models could trigger small explosions. Ed/DearReaders may well be amused by related scholarship / the rich history of China’s ManagementLed ApplianceRevolution: http://en.wikipedia.org/wiki/Zhang_Ruimin#Qingdao_Refrigerator_Plant ]

      • sir_nem … i’m so happy you are there to issue the chill out memos … but no worries … i passed the test and steadfastly resisted going postal even after lance had made it so fashionable

  3. I have to say that a fridge and a house are not alike at all: the secondary market for fridges is not remotely comparable to the secondary housing market. Houses are more like baseball cards than they are like fridges.

  4. LandlordRescue.ca

    I agree totally with the sentiment in this post. I don’t agree with the fridge analogy.

  5. I rent my fridge. When it wears out my landlord replaces it.

  6. I’m at that point in life (50) where I enjoy Abstracting, and enjoy others Abstracting. Milevsky using unusual analogies to describe housing is much needed.

  7. From June 8, 2005…
    Houses Are Consumer Durables, Not Investments
    http://www.lewrockwell.com/englund/englund24.html

  8. I am not too sure how many of you are fans of the Simpsons, but this thread was to enticing to pass up….

    Homers Simpson:

    “Son, a woman (House) is a lot like a . . . a refrigerator! They’re about six feet tall, 300 pounds. They make ice, and . . . um . . . Oh, wait a minute. Actually, a woman (house) is more like a beer… They smell good, they look good, you’d step over your own mother just to get one! But you can’t stop at one. You wanna drink another and another!”

    I am assuming the hangover of the housing mania will be equally as painful and full of nonsensical ramblings

  9. house=fridge? In Canada, you can always squat on Crown land in a yurt free of charge. I would equate a decent yurt with a fridge. Canada is like a big yurt, when in Prague, London, Berlin, or Redding, CA.

    “Why these ongoing attempts to destroy the middle class?”
    – keeper100, ibid”

    Woe to the middle class? Ha. That’s like having sympathy for a colony of bacteria. Inflation is the antiseptic. Enjoy your cleanse.

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