A Word From The Editor
Guest post time! This article is another from friend of the blog, Chris Pascale. Never one to shy away from the controversial money topics, Chris takes on the homeownership versus renting debate. He does this by comparing the running costs of homeownership to renting over decades. In doing so, Chris concludes that while owning the property in which you live is usually a money-losing proposition, it’s a vastly smaller money-losing proposition than renting. Therefore, since we all have to live somewhere, owning is the most efficient use of one’s housing money.
Chris’s cost comparison methods are vastly different from my opportunity cost method, which determined my first home’s $750K opportunity cost. While I focused on what my down payment money could have been doing, Chris concentrates on the housing option with the least cost associated with it over time. Mine was very much a “property as investment” argument, while he makes a “most bang for the smallest buck” argument. Same topic, different points of view. We value differences of opinion at GM HQ, especially when backed up by numbers. That’s a royal “we” since GM HQ is still a one-man show.
Financial Independence (FI) enthusiasts who like to optimize their financial decisions for efficiency may find Chris’s homeownership argument particularly persuasive. Where FI adherents often look for the financial option with the 1% better outcome, Chris’s analysis shows that owning creates financial savings with a much higher order of magnitude. Not only that, but he presents his findings in a much more concise manner than I ever could.
Golden Albatross readers will recognize Chris’s “worth vs. worth it” argument as well. He’s good at relating his Life & Money articles to the basic value proposition this blog is built upon. For Chris, homeownership is very much “worth it.” So, with that introduction out of the way, sit back and enjoy the read. As always, the words are his, but the pictures and comments are my attempt to provide some levity!
— GM Continue reading