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Why high levels of home ownership isn’t necessarily a good thing

  1. Debt: Some kinds of debt are good and some are bad. Good debt is cheap and predictable. Bad debt is unpredictable for example, an Adjustable Rate Mortgage or a home equity loan taken out to cover current expenses.
  2. Poor Rental Market: Being able to reliably generate a stream of income from real estate is a good thing. If everybody owns, the rental market sags, which is bad for those who depend on it for income.
  3. Liquidity: Ownership means tying up a good deal of capital. It’s fine if you get a good return on it, but that depends on a lot of other factors, including timing. And investors have notoriously bad timing. Ownership is not a reliable way to fund your retirement.
  4. Mobility: People who own homes are less mobile. If you can’t move relatively quickly, you can’t exploit changes in the labor market. You’re stuck. Being stuck is not a good place to be.
This was written by Mr. Zero. Posted on Saturday, March 17, 2007, at 6:01 am. Filed under Economics. Bookmark the permalink. Follow comments here with the RSS feed. Post a comment or leave a trackback.

One Comment

  1. Jonn wrote:

    Nice site. You are doing a great service to the web

    Saturday, March 24, 2007 at 10:39 am | Permalink

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