Buying vs Renting: Running the Numbers

There’s been a long-standing bias going back generations towards owning your own home. The US tax code has a couple benefits for home owners: mortgage interest deduction and the ability to exclude capital gains of up to $250,000 on the sale of a home. Clearly our lawmakers have decided to try and coax more of us into “home ownership”. The idea being that it tends to force us to be better citizens and more responsible people. While that may or may not be true, it also may be costing the US economy as a whole. (See Why Don’t People Move Anymore?) It may also be forcing people to make poor financial decisions in favor of owning: when they are likely to move, or it’s cheaper to rent. It may also be forcing people into home ownership who are a bad fit personality-wide: they don’t have the ability or personality to do regular maintenance and all that owning a home typically entails. I guess that’s why we have HOAs now, though that obviously skews the numbers back towards renting…

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