The Economics of Buying vs Renting a House

There was an interesting question on Quora about what economists think about buying vs renting a house? Alex’s response was interesting (paraphrased):

Housing is overrated as a financial investment. From a diversification standpoint, you’re less diversified, and it’s easier to diversify with stocks. Unless you are leasing the basement, houses don’t pay dividends. Dividend stocks do. One can hope that the house will improve in value but don’t count. Indeed, you should expect that your house will appreciate less than the market will.
Another problem with houses is that people are locked by home ownership to location making it more challenging to find jobs when a change is needed. It’s troubling that higher unemployment rates are predicted both across nations and across states in America where the percentage of home ownership is higher. This implies High Home-Ownership impairs the Labor Market.
Houses are wonderful if you enjoy interior decorating, backyard bbq and talking to your neighbors. Houses now also come bundled with a considerable side asset – accessibility to so-called public schools. One argument by the way, which isn’t stressed as much as it should be, is that the schools you attend are no longer connected to your home location, which breaks that historically powerful connection between your geographical area and the school you attend.
Owning a house can also be part of the “American Dream” and maybe as an outcome the US tax code subsidizes houses, notably for the rich. Most economists, however, believe that the United States tax code is biased toward housing. There’s no great reason to bias folks away from renting and towards purchasing. Germany is a rich country, and a big part of Germans do fine by renting their dwellings. See this article on Quartz about most Germans renting instead of buying their homes.
Summary: When you have a choice, select the smaller house closer to work.

If we’re taught to diversify our bonds and your stock portfolio to spread out the risk, why wouldn’t you do the same with the one single thing you are likely to spend the most money on over the course of your lifetime? Alex makes a good point in his argument.

Hello world! Maple Edition

We’re still setting up things around here, but we wanted to get up some content in a hurry and thought we’d share this quick post.

“Maple Match makes it easy for Americans to locate the perfect Canadian partner to save them in the unfathomable terror of a Trump presidency,” the Maple Match website reads, before offering a waiting list for curious singles.

The bombastic effort to lead the Republican Party of Trump has alarmed both liberals, some Americans and those and steam has been gathered by the assurance by some to move to Canada if he’s elected.

The isle of Cape Breton on the Atlantic coast of Canada promoted itself as a tranquil safety for Americans seeking to escape should Trump capture the White House.

The Maple Match website permits users to include their name into a waitlist matching dismayed U.S. voters with curious single Canadians, including “We’ll let you understand the next steps shortly!”

The dating site has recently been very popular on Twitter, indicating its matchmaking service would help Americans prevent the troubles of obtaining citizenship that is Canadian.

“Oh yes. Maple Match.

“I can not wait to meet my Canadian pal! Thanks @MapleMatch,” user @mollye_malone said on Twitter.

While the assurance to “move to Canada” continues to be made in elections past, it seldom plays out in reality.

Looking back at migration data after Republican George W. Bush’s successful 2000 and 2004 runs for the White House — other instants when liberal Americans vowed to move to Canada in demonstration -– indicates few followed up on their guarantees. While immigration to Canada rose during the years of the elections of Bush, the rise wasn’t more than increases in other years, data in the Montreal-based Association for Canadian Studies reveal.