My February 2007 Serpent article observed, “Many consumers buy homes when they shouldn’t.” Its logic and tips could be worth a second look in light of two recent newspaper columns by financial expert Scott Burns:
“The Amazing Arithmetic of Home Ownership”
“Should You Own a Home?”
The first article asserts, “Owning a home is the most reliable way to put inflation on our side, instead of against us.” Considering that inflation too often outpaces our earnings, “having inflation on our side in shelter is a massive advantage.”
Many disillusioned U.S. homeowners, however, have concluded that the supposed American Dream doesn’t make sense for everyone. To answer the question “Should You Own a Home?” the second article elucidates six factors:
Age. If you are under age 30 or over 65, renting is likely smarter than owning. (Score this a plus 10 for ages 31–64, or minus 10 for ages under 30 or over 65.)
Marital Status. Married couples are more likely to benefit from home ownership than singles due to houses’ spaciousness. (+10 for marrieds, −10 for singles.)
Children. Kids may appreciate more space than is available in most apartments. Better schools are more likely in single-family-dwelling neighborhoods. (+10 for children at home, −10 for empty nesters.)
Job/Income Stability. A secure income makes a 30-year mortgage less risky. (+10 if you have a steady job, −10 if you are likely to change jobs.)
Nestiness. Some people are more nest-loving than those who prioritize travel. (+10 if you are a homebody, −10 if you’re ready to roll.)
Tax Benefits (the greatest myth of home ownership). Since the standard deduction on a joint tax return is a whopping $12,400, you won’t derive any tax benefit unless your deductions for mortgage interest and real estate taxes exceed that amount. (Plus 10 if you are single and/or live in a high-cost home with a state income tax. Minus 10 if you are married and live in a non-premium price area.)
Your total score will range between 60 and −60. Here are some examples:
- A young couple with two children scores neutral 0.
- A divorced, late-career worker with job insecurity scores −20 if she doesn’t have kids at home and isn’t a nester, but 0 if she has kids at home and is a nester.
- A retired couple scores 0 if they are nest-oriented, −20 if they are vagabonds.
- A retired single with moderate income scores −20 if a nester, otherwise −40.
In sum, Scott Burns advises: “If you have any doubts, don’t own. If you don’t have any doubts, do.”
Isaiah didn’t specify single-family dwellings when he prophesied: “And my people shall dwell in a peaceable habitation, and in sure dwellings, and in quiet resting places” (Is. 32:18).