New York Times touts You Will Own Nothing: ‘Climate Change Should Make You Rethink Homeownership’ –

[rangerrebew]

New York Times touts You Will Own Nothing: ‘Climate Change Should Make You Rethink Homeownership’ –
 


NYT: October 29, 2024: By Benjamin Keys - An economist and a professor of real estate and finance at the Wharton School at the University of Pennsylvania.

Excerpt: Climate change is most likely making homeownership more expensive and less predictable in large areas of the country, and it’s only getting worse.
As insurance premiums and property taxes rise and future home values grow more uncertain, it’s time for some prospective buyers set on living in areas with high risk of hurricanes, floods, wildfires and tornadoes to reconsider homeownership as a financial goal. Renting is quickly becoming a better way for many people to enjoy these places with much less financial baggage. ...

By raising the costs and the uncertainty around being an owner, climate change is only swinging the pendulum farther from the dream of homeownership. ... Being a renter might sound like a step backward to some — a return to your 20s and 30s — but in this case, it may be worth trading some control for reduced exposure and greater flexibility. A new American dream of renting property near the water — imagine that.

#

Sen. John Kennedy GRILLS Wharton Professor Benjamin Keys over his hypocritical New York Times essay "Climate Change Should Make You Rethink Homeownership":

Sen. Kennedy: "It's pretty bold. Do you own a home?"

Keys: "Yes, I do. It's in a flood zone."

https://www.climatedepot.com/2024/12/18/new-york-times-touts-you-will-own-nothing-climate-change-should-make-you-rethink-homeownership-touts-renting-a-home-as-a-better-way-written-by-a-professor-who-owns-his-own-home/

[roamer_1]

Rent is always and inevitably *MORE* costly than a monthly mortgage. ALWAYS.

These people are morons.

[mountaineer]

The weather will still be the weather, whether or not we own or rent.

[Weird Tolkienish Figure]

Rent is always and inevitably *MORE* costly than a monthly mortgage. ALWAYS.

These people are morons.

Eh? When is rent more expensive than a monthly mortgage? Nobody would ever rent ever.

[DefiantMassRINO]

Rents are high due to lack of inventory, Professor Dick.

[Weird Tolkienish Figure]

Rents are high due to lack of inventory, Professor Dick.

Correct.

[IsailedawayfromFR]

Shouldn't this message be sent directly to Obama who has mansions in Martha's Vineyard, DC, Hawaii and who knows where else?

A climate junkie like he and his wife need to be immediately informed so they can get rid of these.

[roamer_1]

Eh? When is rent more expensive than a monthly mortgage? Nobody would ever rent ever.

ALWAYS.

The guy offering the rentals likely don't own them outright. He's on a 30 year note and his payment, along with insurance and emergency fund, not to mention profit, is what drives what he will charge.

You ain't making money at it breaking even.

[Kamaji]

Eh? When is rent more expensive than a monthly mortgage? Nobody would ever rent ever.

After a few years time on the mortgage. 

[Weird Tolkienish Figure]

After a few years time on the mortgage.

Maybe I guess, depending on interest rates and housing stock. Not at a given point in time though and not for a while. If owning was cheaper than renting, why on earth would anybody rent? That's stupid.

[DefiantMassRINO]

Many could afford the monthly expenses - mortgage, property taxes, insurance, utilities - but haven't saved enough to cover upfront costs or can't get pre-approved by lenders.  So, they continue to live month-to-month.

[roamer_1]

If owning was cheaper than renting, why on earth would anybody rent? That's stupid.

Owning IS cheaper. I figured that out early on, quit renting and purchased my first home in my mid twenties. Now, maybe that's because I have never needed much house - Even with a family of six we never lived in more than a couple thousand square feet - There is an inverse economy of scale working here too. People tend to buy more floor than they would rent...

And I might add that's not true here right now. Since covid housing prices have skyrocketed due to pressure from people fleeing the cities. Prices are easily 3x what they were, and probably approaching 4x... But rentals have priced everyone out of the market too. For the moment however, if you can afford it, and if you can find it, you might be better off renting.

[libertybele]

Owning IS cheaper. I figured that out early on, quit renting and purchased my first home in my mid twenties. Now, maybe that's because I have never needed much house - Even with a family of six we never lived in more than a couple thousand square feet - There is an inverse economy of scale working here too. People tend to buy more floor than they would rent...

And I might add that's not true here right now. Since covid housing prices have skyrocketed due to pressure from people fleeing the cities. Prices are easily 3x what they were, and probably approaching 4x... But rentals have priced everyone out of the market too. For the moment however, if you can afford it, and if you can find it, you might be better off renting.

All which you say is true.  I remember renting when we first married but we got tired of the rent increases, problems with noisy neighbors, parking, running to the laundromat etc.  So we saved some $$ for a couple of years and bought our first home (a fixer upper). We cleaned and cleaned, painted, replaced carpeting etc., -- fixed it up, lived in it for a couple of years, sold it and moved to FL.  Back then the situation with the economy (Reagan) was different.

Currently, rent around here is ridiculous $2,500 for a 2 bedroom, then you have to have a security deposit, and first and last month's rent in order to move in. That's quite hefty. I don't know how those just starting out are able to afford renting.  It's still cheaper than buying.  So -- how can they afford to buy and put a downstroke on a home when the cost of living and renting is ridiculously high?

[roamer_1]

All which you say is true.  I remember renting when we first married but we got tired of the rent increases, problems with noisy neighbors, parking, running to the laundromat etc.  So we saved some $$ for a couple of years and bought our first home (a fixer upper). We cleaned and cleaned, painted, replaced carpeting etc., -- fixed it up, lived in it for a couple of years, sold it and moved to FL.  Back then the situation with the economy (Reagan) was different.

Currently, rent around here is ridiculous $2,500 for a 2 bedroom, then you have to have a security deposit, and first and last month's rent in order to move in. That's quite hefty. I don't know how those just starting out are able to afford renting.  It's still cheaper than buying.  So -- how can they afford to buy and put a downstroke on a home when the cost of living and renting is ridiculously high?

They ain't getting it done here. They are either living communally, living homelessly in the woods, or cave in and get gubmint housing.

And apartments are going in all over here. A decade ago there wasn't anything in town over 3 stories except maybe the courthouse, the hospital, and maybe a couple businesses. Now there's 10 story buildings going up everywhere - All apartments. And mostly low income gvt housing.

Partly it is city folks working online (and therefore getting city wages and benefits), so they are free to live anywhere... They are the ones driving prices up and hogging up housing. It's blue collar that live here that can't afford it anymore, and are winding up on the cheese.

[DB]

Eh? When is rent more expensive than a monthly mortgage? Nobody would ever rent ever.

The legger has more than just the rent paid. The rent money is entirely gone after each month, not to be seen ever again. Some of the mortgage money that pays off debit is in your property and accumulates over time. If you pay 10% more than the minimum mortgage payment you shorten the loan period dramatically with all of that 10% being still yours but shifted into the property. Other than a roof over your head, rent is money thrown away.

[roamer_1]

The legger has more than just the rent paid. The rent money is entirely gone after each month, not to be seen ever again. Some of the mortgage money that pays off debit is in your property and accumulates over time. If you pay 10% more than the minimum mortgage payment you shorten the loan period dramatically with all of that 10% being still yours but shifted into the property. Other than a roof over your head, rent is money thrown away.

Another thing that might be effecting my perspective is 'lock-in'. Lets say I bought my house in the early 90s (which is likely to be true, I don't remember).

At the time we were living in a hovel for around 600/mo.
When I bought, I increased footage a little bit, but the payment per month was just about a wash, including taxes and catastrophic insurance, which was built into the payment.

Now... Here's the thing: It didn't remain at 600/mo though the actual payment remained the same - The difference was increase in the taxes and insurance. But it was always substantially under a grand per month. I know that because at the time of my first destruction,  I was just fixin to move, and the new place would have cost right at 1100/mo, and it was making me itchy - While I coulod easily afford it, I was worried if I could make the payment, for sure. in the face of any sort of downturn... And whether I could continue to make double payments often to make the note leave quickly.

It was a big decision because I have always very pointedly lived within my means. I am SO glad I didn't make that move.

Suffice it to say that I have never paid a thousand a month in either rent or mortgage (other than double payments in the good times, I mean). EVER.

Now I know one could say that skews my perspective , and I am sure it does. But that is precisely because I was locked-in to 90s prices, more or less.

Providing you buy in the bottom of a downturn, property values tend to rise over time. if you lock in, then property values will increase your equity, rather than your cost, and rental costs, which are tied to property values, will also increase around you. Within a decade you will likely be paying substantially less than market, even without trying to pay it off.

[DB]

Another thing that might be effecting my perspective is 'lock-in'. Lets say I bought my house in the early 90s (which is likely to be true, I don't remember).

At the time we were living in a hovel for around 600/mo.
When I bought, I increased footage a little bit, but the payment per month was just about a wash, including taxes and catastrophic insurance, which was built into the payment.

Now... Here's the thing: It didn't remain at 600/mo though the actual payment remained the same - The difference was increase in the taxes and insurance. But it was always substantially under a grand per month. I know that because at the time of my first destruction,  I was just fixin to move, and the new place would have cost right at 1100/mo, and it was making me itchy - While I coulod easily afford it, I was worried if I could make the payment, for sure. in the face of any sort of downturn... And whether I could continue to make double payments often to make the note leave quickly.

It was a big decision because I have always very pointedly lived within my means. I am SO glad I didn't make that move.

Suffice it to say that I have never paid a thousand a month in either rent or mortgage (other than double payments in the good times, I mean). EVER.

Now I know one could say that skews my perspective , and I am sure it does. But that is precisely because I was locked-in to 90s prices, more or less.

Providing you buy in the bottom of a downturn, property values tend to rise over time. if you lock in, then property values will increase your equity, rather than your cost, and rental costs, which are tied to property values, will also increase around you. Within a decade you will likely be paying substantially less than market, even without trying to pay it off.

In short, real property is usually pretty good at hedging inflation.

[ScottinVA]

When that asswipe “professor” surrenders his house and rents an apartment, he’ll have at least some minimal level of credibility.  But he won’t, and he won’t.

[Weird Tolkienish Figure]

The legger has more than just the rent paid. The rent money is entirely gone after each month, not to be seen ever again. Some of the mortgage money that pays off debit is in your property and accumulates over time. If you pay 10% more than the minimum mortgage payment you shorten the loan period dramatically with all of that 10% being still yours but shifted into the property. Other than a roof over your head, rent is money thrown away.

I'm talking about in terms of monthly payments. Rent is almost always less.

[libertybele]

Another thing that might be effecting my perspective is 'lock-in'. Lets say I bought my house in the early 90s (which is likely to be true, I don't remember).

At the time we were living in a hovel for around 600/mo.
When I bought, I increased footage a little bit, but the payment per month was just about a wash, including taxes and catastrophic insurance, which was built into the payment.

Now... Here's the thing: It didn't remain at 600/mo though the actual payment remained the same - The difference was increase in the taxes and insurance. But it was always substantially under a grand per month. I know that because at the time of my first destruction,  I was just fixin to move, and the new place would have cost right at 1100/mo, and it was making me itchy - While I coulod easily afford it, I was worried if I could make the payment, for sure. in the face of any sort of downturn... And whether I could continue to make double payments often to make the note leave quickly.

It was a big decision because I have always very pointedly lived within my means. I am SO glad I didn't make that move.

Suffice it to say that I have never paid a thousand a month in either rent or mortgage (other than double payments in the good times, I mean). EVER.

Now I know one could say that skews my perspective , and I am sure it does. But that is precisely because I was locked-in to 90s prices, more or less.

Providing you buy in the bottom of a downturn, property values tend to rise over time. if you lock in, then property values will increase your equity, rather than your cost, and rental costs, which are tied to property values, will also increase around you. Within a decade you will likely be paying substantially less than market, even without trying to pay it off.

Yes over time property values generally increase in value over time and obviously with rent, there is no equity accrued.  However, because of the high costs now of homeowners insurance, flood insurance and taxes, which are normally incorporated into the mortgage payment, many who own homes can no longer afford their mortgages anymore.  With the high cost of rent some are just fleeing the state.  Wages aren't keeping up with the increases nor with Joe's inflation.

Still those who are leaving CA, NY, NJ are still finding FL cheaper, so we have a lot of blue state transplants.

With this being a stellar year for hurricanes, I dread opening up our homeowner's policy renewal notice. Our taxes are capped and we qualify for exemptions, so taxes aren't the culprit I'm concerned with. 

[DB]

I'm talking about in terms of monthly payments. Rent is almost always less.

But that is short sighted. The rent produces no assets or wealth.

[Weird Tolkienish Figure]

But that is short sighted. The rent produces no assets or wealth.

Sure, but its what some people can afford, Plus there are times it would be better to put that difference in an index fund or something like that, instead of buying, Rare but imagine it was 2007 for example.

[DB]

Sure, but its what some people can afford, Plus there are times it would be better to put that difference in an index fund or something like that, instead of buying, Rare but imagine it was 2007 for example.

Not if you're burning your money in rent. Buy what you can afford and get the ball rolling so you can move up later as you accumulate wealth. Especially if you plan on staying in the same areas for a number of years.

[Weird Tolkienish Figure]

Not if you're burning your money in rent. Buy what you can afford and get the ball rolling so you can move up later as you accumulate wealth. Especially if you plan on staying in the same areas for a number of years.

But at a given point in time, assuming no money down, your average mortgage payment will be much higher than your average rent payment.

[libertybele]

But at a given point in time, assuming no money down, your average mortgage payment will be much higher than your average rent payment.

Assuming no money down? If a builder/lender would allow that of course your mortgage would be pretty hefty.

[Weird Tolkienish Figure]

Assuming no money down? If a builder/lender would allow that of course your mortgage would be pretty hefty.

 

Whatever. Fact is that renting is cheaper than owning on a monthly basis, otherwise who on earth would rent? But of course many people do, because it's more affordable than buying.

[jafo2010]

The problems are many.  First, real income has not grown but 4[Trump years] of the past 30 years.  With low cost foreign labor, both blue and white collar workers have suffered with no real income increases.

The UGLY TRUTH is that the pouring of legal and illegal aliens into the USA has frozen incomes, and what little increase has occurred gets eaten by inflation.  Add four years of Biden Economics, better known as HYPER-INFLATION, and people are lucky to afford food to eat and survive to the next day.

When I bought my first house, I bought from an owner that financed the mortgage with my 20% down.  I literally had a mortgage that placed me with an 80% debt to income ratio.  But back then, in 1979, everyone I worked with said take on as much debt as you can, because everything will cost considerably more the following year.  It was a struggle, but I juggled my finances and made it through the first year, and then the next. 

Three years in, I was offered a job by a client that put me in a city 700 miles away from my house.  I could not sell the house for years because interest rates were 17%.  I rented a room for $50 a month while my family was 700 miles away in my house that would not sell, no matter the price.  That went on for 2.5 years, until I got a job with another company making 40% more income, and the company I was working for, to keep me, broke down and bought my house.  I stayed at that job.

Best advice I have is for young people to continue to live with parents until they save enough for a 20%+ down payment on a house, and have a buffer for unexpected expenses, and then buy a house, or begin by buying a foreclosed house needing some TLC, where you can work on the house to restore it to a solid value.

Our primary house now, was a foreclosure.  Originally it sold for $340,000 in 1993.  We bought it for $187,000.  It was stripped of almost everything.  Light fixtures, doors, sinks, all appliances in the kitchen, garage door opener, banisters and spindles on staircases and a bridge on the 2nd level, and so on.  I dumped $30,000 into the house before we moved in, and it is now worth $600,000.

We paid the mortgage off in 10 years and bought a 2nd house on a lake.  If you manage your money, you can accumulate wealth, you can buy a house. 

I am tired of the whining.  The young today want everything handed to them by their parents.  I paid 100% of my university education.  I did not get one dime from anyone.  I paid for 100% of my first car.  It can be done if one has a work ethic and is willing to save to get ahead. 

[Smokin Joe]

Whatever. Fact is that renting is cheaper than owning on a monthly basis, otherwise who on earth would rent? But of course many people do, because it's more affordable than buying.

Sorry, boomtown economics. House bought on the dip in property values in the late 80s  after the oil boom of the late '70s died. Even with lousy terms (FTHB loan, but at 10+%, still about $400/mo PITI), rents were almost as much.
Fast forward, paid the house off early, saved two years payments by rounding payments up to the next 100, and income went up and down, including layoffs and a divorce, and marrying again. By the last year of payments, a 2 BR was $400 to 600/mo. (plus utilities). By 2010, that 2 BR would be renting for over 1600/mo.
(Bakken boom). The house would have sold in a week for over 10X, but where would I live? (Mrs. Joe from the area, and would not go for a long move--too much family here).

I could have paid rent all those years and had nothing but higher rent.
I kept the house, expect to hand it down to one of the kids or grandkids, but the locked in house payments were cheaper (and less subject to change) in the long run than paying rent would have been. But this is an oilfield town, with an agricultural base, and the dynamics are a bit more boom/bust than some.
 And that does not even factor in having a garden, fruit trees, and a dog.

[DB]

I don't know any long-term renters who built up wealth over the years. It's a wealth killer.