PDN Thursday Commentary page columnist Catherine Rampell is baffled by the American idea of homeownership (“Misplaced Faith In Homeownership,” PDN, Aug. 25).
Ah, the blush of youth.
It’s doubtful that the majority of economists shun homeownership and rent a residence, but there is a solid case against individual homeownership as an “investment.”
The idea of earning a return on real estate should be left to landlords who buy properties to rent.
However, there are solid reasons to own a home.
The primary benefit to owning a home is that no one, including Medicaid, can take it away.
While the stock market and the economy can head south unexpectedly, there will be equity in a home that can be tapped for critical situations and repaid without significant loss.
Additionally, a home has tax advantages for heirs.
Upon death, a home can be revalued to current market value, avoiding what might be many thousands of dollars in taxes, whether or not the heir keeps or sells the home.
None of these benefits would be available to a renter.
The choice is clear: Pay rent and get nothing, or purchase a home and build equity over a long period.
If Ms. Rampell decides to rent her residence, she chooses to eschew all of the benefits of homeownership in her later years.
The return on her terrible “investment” will be zero, but perhaps a financially ignorant homeowner will leave her a house or a few hundred grand to make up for her lack of foresight.