The fact that there is already an excessive amount of demand awaiting its absorption, despite how everyone is frightened and calling the crash, is another reason why it is less likely to occur that way. 2008 saw no one, at least not the broad public, making this forecast, as I'll explain below. The ownership rate was noted to have peaked in 2004 in the other comment. Having previously peaked in the second quarter of 2020, we are currently at the median level. Between 2008 and 2012, it dropped by 3%, and by the second quarter of 2020, it had dropped from 68 to 65.
Investing in both real estate and stocks can be prudent choices, particularly when backed by a robust trading strategy that can navigate you through prosperous periods.
@@00dfm00 Maybe if you bite off more than you can chew (i.e. take on the biggest, most expensive house you can), then I can understand such regrets. but if you Don't live beyond your means, and can make ends meet each month, surely buying a property is better than borrowing one (why throw £1200 away in rent each month when you could be buying a house for the same money? One brick at a time.
@@louisdrouard9211 did they live beyond their means? Where I live, monthly rent prices and mortgage repayments are more or less the same. In fact, sometimes it's cheaper to have a mortgage (e.g. a property that costs £1200 a month in rent might only cost you £1000 in mortgage payments if you were buying it instead). I've literally just experienced this now. My wife and I were eligible for a mortgage about 30k more than the property we went with (but we didn't want to be struggling to make ends meet each month, so we opted for a cheaper property). Before this, we'd spent time looking at rent prices - for similar properties (size, location, number or rooms, etc.) landlords were asking for more rent than the banks were asking for in monthly mortgage payments. Imagine you have a property worth 250k, and the rent and mortgage payments are exactly the same each month, I just don't see how paying 400k over 30 years for a property is beneficial as rent, when you could spend 400k over 30 years as a mortgage and actually end up owning it. It depends on many factors (lifestyle, age, etc.) Obviously someone with a mortgage is somewhat 'trapped' (e.g. they can't just 'give a month's notice' and ride off into the sunset), but at the same time, they can put some roots down and get comfortable knowing that noone can evict them.
The other one I've never heard anyone say "Property owners have really suffered over the last 2000 years" In all seriousness history has taught us that it's always better to be a landowner than not to be a landowner
I'm amazed how it somehow manages to twist the 2008 financial crisis around to blame it on people taking mortgages rather than the institutions that offered sub-prime mortgages or the banks that bundled those risky loans together and sold them as "safe" commodities.
the housing crisis wasn't caused by people wanting to buy houses, it was caused by banks allowing the lending of too much money to high risk borrowers.
john tenorio buy a house early, save&invest while paying off the mortgage, then invest more once the mortgage is paid off. For those buying a home in there 40s-50s, it's a much bigger gamble.
Idk about Sweden but renting in Australia is basically serfdom. You can't so much as put a poster on the wall without permission. You're subject to regular, intrusive inspection as though you were a child. The properties are invariably undesirable and poorly maintained - on busy roads, no privacy, no insulation, cheap water heaters, etc. Worst of all they can, and do, kick you out whenever the lease comes up for renewal, which is no basis for a stable life and is outrageously inconvenient - particularly at times when there's a rental shortage and every property has multiple applicants.
Clearly a bias in the Economist's argument. The landlord class would be very happy if working people never own their home. Rent seeking has always been a hallmark of the ruling classes.
Sounds to me like you just have poor tenant protection laws over there? I live in Germany and I can do whatever I like to my flat, I've never been "inspected", it's recently renovated and a decent location, and my landlord can't increase my rent unless they make some improvement to the building that I materially benefit from.
I bought my appartment in Madrid 8 years ago taking advantage of the once in a lifetime low prices of housing caused by the financial crisis in Spain. Now I pay for the mortgage less than half of the price of a rent for a similar house in my area and I could sell it for a price that doubles what I paid for it back in 2013. I'll be a mortgage-free man in my 40's in a city where most of the people of my generation and younger are really struggling to pay the rent of their small-shared-expensive houses. Do you really wonder if I have ever regretted my decission?
majority of people in Switzerland , big cities in china rent are you saying they don't have a healthy desire to have a stable or predictable living situation.
I have been staying in rented homes since I was toddler. Family can't afford to buy. Lost count of the places I have stayed throughout KL and Selangor in Malaysia. When I started working I saved enough money to buy my mom a house. I was 26 at that time and the commitment does scare me a bit. The look on my mom s face when we finally own a house is priceless. I have given her stability. 10 years later never once regretted buying the house. Rental and house price has crept up so much. Different reasons for every person and country on renting or buying a home.
@Matt L And you're at the mercy of the whims of your landlord. And even if you weren't, the advent of the short-term lease will drive up rent and ownership costs regardless of the middle class deciding not to own property.
@Matt L You are ignoring the fact that you have to live somewhere, you can't just put that money on stocks, because you need to pay rent and utilities as well. Why waste that money on rent, when you can pay for your house and actually have an asset. Specially if home prices are increasing.
Oliver Walker and the government bailed out banks and industries before because of the “too go to fail” so it signalled banks could be reckless because Uncle Tom would there to bail them out of any issue.
The problem isn't home ownership per se, but politicians _listening_ to home owners. This is an almost unavoidable democratic problem: the eligible votes to whatever city council you want to stand for is inevitably going to be home owners, while the beneficiaries of development projects are largely the people who don't (yet) live there and don't (yet) have a vote. This creates immense pressure towards being overly restrictive. Short term the home owners win, long term everyone loses. Singapore is actually the exception that proves the rule: it's both rich and has a high home ownership rate, but it's also a draconian one party state with leaders who have much less need to pander to the rabble.
Let me think. Would I rather spend 30 years paying rent with no asset to show for it and still having to foot the bill for housing in retirement… or spend 30 years paying the same amount, have an asset to show for it, no housing costs in retirement and something that I can pass on to help my family after I’m gone? Seems like a pretty easy choice to me.
If you take the money you would have saved for a down payment and invested it into the stock market, you wouldn’t have nothing to show for it. In some situations buying may be better value, but if you are disciplined renting can be just as viable if not better for building generational wealth.
@Richard Jackman and you say that as home prices are starting to fall due to rising interest rates. This is cherrypicking. (Note: All of this short term stuff is irrelevant if you are in a financial position where you don't have to sell your house or your stocks and can hold for the long term.) As for the veracity of kashmoney's statement, I haven't seen anything to suggest that the risk adjusted returns of the real estate sector are higher than other sectors, but ordinary people can dial up the risk and expected returns in real estate with leverage (e.g. a mortgage) in a way that they couldn't elsewhere.
@Richard Jackman You've only established that 11 months is the timeframe YOU care about (the previous poster said nothing about 11 months and his statement, made during a bear market, suggests a longer term outlook). If 11 months is your investment horizon, you should not be putting the money in a house or stocks. It is common sense. A more fair assessment is that VTI (a US total market cap weighted index fund) has had an average 7.5% annual growth since inception, meaning that it is a viable way to gain wealth. In other words, the poster wasn't entirely wrong. The second thing is that, you intentionally seem to be ignoring what rising interest rates will do to some of the more overvalued property markets (this is already visible in some of the more overvalued US and Canadian markets).
Remember: the Economist is not a journal made for the working class interests, it's made to spread the ruling class ideology, be careful when watching their videos!
My home is paid for when you add my real estate taxes and house insurance they amount to less than 200 a month where can you rent for that? Even when you factor in a new roof a new Heating & Air conditioning unit I'm still ahead compared to rent
REITs absentee landlords should be banned, prohibited, forced to divest. And no one apartment or housing rental company should ever exceed 10% of the market share in a 100 mile area. They've bid up the prices as investors with low interest rates seek a return, they piled in to REIT's which are forced due to their prospectus to buy up real-estate, they can't sit on the cash. And they do it sloppy paying well above asking prices to close deals, even accidentally entering bidding wars with their own agents in their own fund... cartoony idiocy.
Thank you. I'm trying to buy a house gave up and looked for rentals and saw hundreds of starter houses for rent. I'm priced out, inflated prices. It's not an asset it's a necessity, they should buy luxury houses but not starter homes.
Ann Otter if investors that buy foreclosures and renovate them wouldn’t increase those barriers because They are still pricing out a lot of people. There are no true “starter homes”
it is not the Banks or investors destroying the entry level housing market - it is the intentional Government / RBNZ policy to print digital money continually that dilutes buying power of the existing M3 money supply in circulation - do the math! homeowners and investors are simply hedging their savings as sanctioned and fostered by Government policy. it is a store of asset buying power. refused to buy shares after the '87 crash, i will never forget the look of my Accountancy tutors face as she walked into the lecture theatre on black tuesday , i bought property instead and never looked back - a humble 90 m2 house i bought in Berhampore for 25K in 1989 sold for $1.05 M - so again - do the math
they did mention that in the video. but again this is a failure of policy in many countries who leave the elderly on their own without adequate supports.
I think a housing crash will happen because all those people who bought homes over asking price, although it was at a low interest rate, they are over their heads. They have no equity if the housing prices continue to go down, and if for whatever reason they cannot afford the house anymore and it goes into foreclosure because even if they try to sell, they will not make any money. I think this will happen to a lot of people especially with the massive layoff predicted for the future and the cost of living rising at a high speed.
For 2023, it’s hard to nail down specific predictions for the housing market is because it’s not yet clear how quickly or how much the Federal Reserve can bring down inflation and borrowing costs without tanking buyer demand for everything from cars to homes.
Interest rate is currently at 4.75%(8th rate hike since March last year) Inflation at 7% and mortgage rates is at over 7.5% but yet minimum wage remains the same and my retirement portfolio has suffered tremendously these past years, so my question is how do senior citizens retire and live off such unstable economy. The long term game is obviously not for me at this point.
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I think it costs more to own. Being a landlord and an owner I have a perspective on both balance sheets and in the longer term it's surprising how equal they are. I'm a lucky sod, I know, but made loads of sacrifices when I was younger and for example even now do not take 'holidays' as I enjoy building maintenance. Avoiding children and divorce were other massive cost saving measures. Owning does give you more security and power over your own destiny which for me is the decider.
So true it’s a asset that if your even semi intelligent about how you buy and where you buy it you can sell it for as much if not more than the however much you originally bought it for
But they did mention that owners do not sell as much as is needed. I know so many people, including my parents who've been living in the same property for as long as I've known them. My grandparents have been living in their home for more than sixty years and it's become worth so much more now (even adjusted to inflation). But they're not selling it because they're living comfortably so why would they?
Do the math or review previously done calculations when he says is equal that is exactly what I means. The reasoning is behind home buyers tend to by more than they rent. One rent $1000 then buy for 1500 a month. In the long run is the same.
With mortgage, you know what you owe each year. With rent, you have no idea what you have to pay the next year, next year, and next year... In my last rent, my rent increased $600 per month in 2 years.
Liking a video like this doesn't necessarily mean you agree with the conclusions but rather that you are interested in the content and would like the youtube algo to serve you more such content
I think it's time to make it more appealing for potential buyers. Real estate can be quite the rollercoaster! the stress and uncertainty are getting to me. I think I'll cut rents to attract potential buyers and exit the market, but i'm at crossroads if to allocate the entire $680k liquidity value to my stock portfolio?
"Overall, buyers hold a lot of the cards right now, and sellers are having to give out more concessions to close a deal." All the best, buying on sale is actually one of the best ways to invest in stocks, and advisors are ideally suited for such task
Until the Fed clamps down even further I think we're going to see hysteria due to rampant inflation. If you are in cross roads or need sincere advise on the best moves to take now with financial markets will be best you seek a fin-professional with fiduciary responsibilities who knows about mortgage-backed securities for proper guidance.
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The effects of the downturn are beginning to sink in. People are being impacted by the long-term decline in property prices and the housing market. I recently sold my house in the California area, and I want to invest my lump-sum profit in the stock market before prices start to rise again. Is now the right moment to buy or not?
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as someone who lived in Switzerland, it's very clear to me that this "film" is more entertaining than educational, because obviously the reason why in Switzerland there are so many renters is that the houses are just so crazily expensive that nobody can afford them, and it just so happens that they have probably the greatest law institution when it comes to balancing rights between people etc.
Did you watch the video? House prices in Swiss have only risen 70% to Britain's 340%. I'm sure it's still expensive but it's clearly not like in other countries.
Switzerland is the example they always go to. It's how they sold Brexit to the masses. That we would somehow be the next Switzerland... Don't fall for it people. The Economist clearly has a specific agenda serving very specific interests...
Did you watch the end, UK government subsidies it's homeowners on a massive scale driving up house prices. Also it could be measured in local currency, so divide by 6 conservatively. that currency really got handed down. Switzerland is one of the few countries that tax imputed rent, taking away one of the tax cuts home owners get in other countries. Further, pension funds invest heavily into the housing market, for better or worse, but definitely outcompeting homeowners. As a Swiss living in the UK i can tell the reason why you'd want to buy in London is because as a tenant you have zero rights and every other apartment is mouldy, wet and cold. Students are not accepted, pets are not allowed, minimum contract duration of 2+ years, basement apartments, it's a bedroom if it fits a bed etc etc. There are laws against this exploitative behaviour in Switzerland.
they state that buying bring more problems than renting, then they talk about the crisis in 2008. as if people buying homes was the cause of it but not the banks and the financial market taking too high risks for the sake of biggest interest.
Back in the day, when I purchased my first home to live-in; that was Miami in the early 1990s, first mortgages with rates of 8 to 9% and 9% to 10% were typical. People will have to accept the possibility that we won't ever return to 3%. If sellers must sell, home prices will have to decline, and lower evaluations will follow. Pretty sure I'm not alone in my chain of thoughts.
If anything, it'll get worse. Very soon, affordable housing will no longer be affordable. So anything anyone want to do, I will advise they do it now because the prices today will look like dips tomorrow. Until the Fed clamps down even further, I think we're going to see hysteria due to rampant inflation. You can't halfway rip the band-aid off.
Home prices will come down eventually, but for now; get your money (as much as you can) out of the housing market and get into the financial markets or gold. The new mortgage rates are crazy, add to that the recession and the fact that mortgage guidelines are getting more difficult. Home prices will need to fall by a minimum of 40% (more like 50%) before the market normalizes.If you are in cross roads or need sincere advise on the best moves to take now its best you seek an independent advisor who knows about the financial markets.
Carol Vivian Constable is the licensed fiduciary I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment..
Not it's quite true. Yes the Banks were highly responsible for the predatory leading practices. But if it wasn't with the cultural obsession with ownership, and be open to being preyed on. There would have been no prey for banks to make mortgage profits.
@@ottottotto980 If the government and federal bank didnt bail out or insure the banks making high risk payments then the equation is pure profits regardless of the outcome.. If it fails, the government outs in the difference, bank takes the property and sell it again.. If it succeeds you pocket the profits.. If the government stops insuring these high risks individuals then the bank wouldnt have loaned these people in the first place
The quality of Swiss housing is impossible to exagerate. I'm a housing architect working in London and it seems like 90% of the projects that really get the office excited are Swiss, we dream of delivering such successful and varied projects. Instead we design to minimums, ramming as many units on site, because that's all developers pay for and our housing market is basically just about delivering a commodity now. We need a rethink of our housing market not just because it's unaffordable, but because it results in the poor quality housing that a rich city like London should be ashamed of.
Have you tried to rent in Swiss? A million rules and red tape, comparing to "I make my own rules" when you are in your own house 🏠. Video does not address that at all.
Leerill Same in USA. I lived in the mid Atlantic region near NYC. So housing was built in tightly packed groupings to maximize land use I moved to a low cost southern state where land is abundant. Individually built homes here do have large lots and in some cases acres to build on. But all the planned developments no matter how big the land it’s built on are very much like your description of the London market. Beautiful homes packed tightly together to maximize the developers profits.
Did they paid it off right away at the start, or does it goes over a loan?? Let me make it clear: till the rest of the loan isnt paid back- it cant be called theirs. This is the illusion or some sort of impostor syndrome.
@@mikahist4155 its the most easy and logical way to secure retirement... keep renting forever, rent prices rise with inflation and as a retired person your income wont rise with inflation.. it can be troublesome. sorry for bad english":)
Home ownership is about protecting against worst case scenario. When you retire or lose your job or get too old to work, at least you have a home of your own to live in.
@@tohneyteoh You are right. Most Anglo-saxon countries believe that homeownership is inherently safe, whereas rentals are not. However, the advantage of homeownership over rental lies in policies that only reinforce the "benefits" of owning while further discouraging renting. Tenure neutrality should be the norm, what is currently needed is more policies ensuring stable and affordable rentals in order to balance the benefits from both tenure forms. Rising costs are not only driven by supply, but also by demand, which is itself artificially reinforced by homeownership-driven policies.
Inflation hits people a lot harder than a crashing stock or housing market as it directly affects people's cost of living that people immediately feel the impact of. It's not surprising negative market sentiment is so high now. We really need help to survive in this Economy. The fin-Market;s have underperformed the U.S. economy as fear of inflation hammers the prices of stock;s and bonds. My portfoliio of $250k is down to $192k any recommendation;s to scale up my return;s during this crash will be highly appreciated.
You have to get a financial-advisor/broker to aid you diversify your portfolios to include commodities, inflation-indexed bonds and stocks of companies with solid cash flows, as opposed to growth stocks where valuations were based on future potential earnings.
I agree, my proffit have been quite consistent, regardless of market situation, I got in early 2019 and the constant downtrends and losses discouraged me so I sold off, got back in Dec 2020 this time with guidance from a portfolio-adviser. I found her on a CNBC interview where she was featured and reached out to her afterwards. long story short, its been two years now and I’ve gained over $85ok following guidance from my inveestment adviser.
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There’s a fundamental flaw in this argument. The difference between renting and buying is that after 25-30 years you actually own the house you lived in. Whereas by renting that house, you never actually own it but pay off someone else’s mortgage on that house
It is true that when you buy a home with a mortgage, you will eventually pay off the loan over time and own the property outright. This is not the case when you rent a property, as you are simply paying to use the property for a set period of time, typically on a month-to-month basis. However, when you buy a home, you are responsible for the costs of maintaining and repairing the property, as well as property taxes, insurance, and other expenses. These costs can be significant, and they can add up over time. Additionally, owning a home can be risky in the sense that you are more exposed to fluctuations in the housing market and interest rates. If the value of your home decreases or interest rates rise significantly, you may find yourself in a difficult financial situation. Renting, on the other hand, can offer more flexibility and lower upfront costs. When you rent a property, you typically only need to pay a security deposit and first month's rent, whereas buying a home requires a down payment and closing costs. Renting also allows you to move more easily if your circumstances change, such as if you need to relocate for work or if you experience a change in your financial situation. In summary, while it is true that owning a home allows you to eventually own the property outright, it is important to consider the costs and risks associated with homeownership as well as the benefits and drawbacks of renting. The decision to rent or buy a home ultimately depends on your individual financial situation and lifestyle preferences.
More a less. Coservative journalist appointed by their chief that at the same time was ordered by an average european conservative with a wealthy position that surely owns his own house.
You know what also ruins the economy? unsustinably high rents (increasing homelessness, decreasing consumer spending, forcing more people to "roommate" with strangers or live with parents, losing more than 30% of stagnant poverty wage income to rents, etc)
And obsession with homeownership causes that because homeowners are more likely to lodge protests against new construction and development that would help reduce rents by offering more supply.
I have lived in Switzerland for 4 years and I can say that even renting a home is a disaster there. You may need to be in the queue from months to years!!! just to find someplace to rent and when you do, although the prices may look stable, you need to leave the property anytime the landlord wishes to use the property herself. I love your videos but this one is biased in my opinion and did not investigate thoroughly enough.
You need to understand that if you own a property in switzerland, following is important to take into account: Anyone who owns residential property must pay tax on its imputed rental value as fictitious income at the federal and cantonal level. (mas) The imputed rental values may not be less than 60% of the average market rent at the cantonal level and not less than 70% at the federal level. This might be an explanation, why the rate of ownership is that low.
@@oliverm1255 unintended consequences - how's London's rent prices compare? if you raise taxes on home owners (the landlord) do you really think the landlord doesn't raise the rent to pay for it?
The high home ownership rate in Singapore is a bit of a misnomer, most people live in government subsidized public housing, even if they technically own it. It would be stronger to argue that if anything, Singapore proves that more government regulation over certain sectors of the economy can lead to a more stable country, not that high home ownership rates create stability
Technically all the "houses" in Singapore are more like Condos, so even if you look at from a Government sponsored condo perspective you still arise at something completely different than the random neighborhood models of other cities.
To be honest you can argue that the US government subsidizes the housing market too. There's a ton of insurance and government intervention in the mortgage market on behalf of the borrowers.
Lol, prove what? Singapoure it's a city, not a big country with hundreds cities and thousands villages, just try to explain me (i am from Russia) how goverment controls will work well in such big country like US)
In Singapore all public housing (and a big percentage of private condos) are leaseholds. The state owns the public housing (and the land of leasehold condos) and citizens buy a lease for 99 years (if new) or whatever is left (if second hand). Reason being is that land is scarce and need to be redistributed again. However no one knows for sure what will happen when the lease expire. Officially it's taken back by the state, what social issues that will create and what the solution will be we will see when starts happening in a few decades
What I found to be the last straw was the never-ending increase in rent. After 15 years of renting with places in similar settings and with similar amenities, rent had nearly doubled in that time. It was literally only a couple hundred more a month for an actual mortgage.
I rented for 10 years and my mortgage now is half of what my rent used to be. Of course when you take into account rates, insurance, and maintenance costs it works out the same. But when the mortgage is paid I will have a forever home and will bring more security in old age. So I believe buying is better and definitely feels more secure.
Why would it bring more security in old age? Because you can sell it for money? My grandma owns her home and she is too old and disinterested in selling and making money. There is no difference for her if she would have been renting or owning now. Her money is locked in her home. She doesn't use money anyway. If she was renting she would be secure too. Can't be kicked out, not in my country Sweden anyway
@@testtestsson4927 when you old can't make money or something happened, you know you own the roof on your head. You can sell it, or you can give it to your children. Houses and lands are the most valuable inheritance in my country.
It's the future of the world Neo feudalism, you don't own anything and everything it's subscription based, it's everywhere from spotify to the whole issue with right to repair.
I was recently looking for somewhere to rent in London and happened across this new build to rent phenomenon. One of the companies that seems to have literally bought up half of London, gutted it and maximised the number of little boxes it can legitimately rent out actually said on their prospectus that they were providing a solution to millennials unable to get on the housing ladder...now you can rent one of their shoeboxes for a minimum of £1500 pcm for life and when I say shoeboxes I’m talking studio apartments, you want a 1 bed...you’re looking at £2000pcm! Our lives are going to turn into an endless reel of renting and subscriptions if we dont do anything!
Everyone complaining about renting didn’t watch the vid at the part where Swiss renters have strong tenant protections. Of course renting seems less appealing than ownership for everyone else! We don’t have such protections.
exactly, check out Munich in comparison, very low ownership, prices have gone up almost exponentially. Renters are exploited all the time in Germany *and* ownership has gotten very expensive as well
This piece sounds like it was written by a landlord. As a mom and pop landlord renting a part of my primary home I still think owning a home is the best way to go. I think the banks are mostly to blame when they lend on extremely high risk loans without education and the slow increase in wages versus housing cost. I’ve bought both of my homes via a small down payment loans. Otherwise I would never have been able to own as a millennial.
Second this! So many parallels are made with such a level of generalization that at the end nothing is relevantly argued. It’s sad to say it out loud, but this video is clearly made with an agenda in mind.
I don't. I sold my flat in March and am now renting. Much less hassle and I'm paying less than I was due to not needing buildings insurance, no repair bills, the same monthly payment as my mortgage was and no factor bills. The stress of selling was an absolute nightmare and I didn't even technically make a profit. Never again.
@@pnklady3788 where I live, rent is higher than mortgage payments. A 2 bedroom apartment is now $1500 with no utilities included. A mortgage is 500-$1000 a month and you need to pay utilities. Every year the cost of rentals goes up, but income does not increase. Cost of living keeps increasing as well. It's like renters here are doomed to fail if they get sick, loose a job or face some sort of emergency.
Because that's not entirely what happened. There was predatory lending practices that treated homes like slot machines. When the economy crashed and those variable interest rates went up....
Nonsense, in case you didn't know, banks want to make money. Why would they lend to people who couldn't afford? They were encourage by the federal reserve via low interest rates and subsides, and lower standards encouraged by the government. In a free market, these loans wouldn't have been made.
@@Tony-hx2fj I mainly agree with that but banks are not the victim here. They started playing with subprime loans and derivatives and then got burned. It wasn't poor people who caused the '08 crash.
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Pure bs from Economist, when you buy home it's yours forever and your kids can live there without need to pay rent and they would be safe from becoming homeless. You said it yourself that paying rent and mortgage is almost the same, so we should all rent forever and own nothing instead of buying something which will be ours and give us safety. I like your logic @Economist 🙄🙄🙄
@@ssruiimxwaeeayezbbttirvorg9372 Assuming 1% property tax, inheriting a $1,500,000 home would run you $15,000 annually in tax or $1,250/month which is what many suites are renting for in large cities right now. $1,250 a month for what could be a small mansion? Sure, I'll take it.
By owning a home during my working years I paid, over 35 years, less on mortgage and property tax than I would have paid on rent. It also had a fixed payment which was a great help in budgeting and also a substantial income tax reduction. Thanks to the appreciation over the years I was able to retire and buy a new house with no mortgage. To me that was the dream when I originally bought a house, and the dream came true. The 2008 housing bust was caused by poor lending practices and financially unsophisticated borrowers.
Yep. If inflation were "normal," owning would be an even better deal. By the time my mom's house was nearly paid for, her car note was double her monthly mortgage payment.
Your home has only appreciated in value because there aren't enough homes for people to live in, and this appreciation causes people to prevent homes from being built since it is in their interest. That is what this video is about.
Idk man my family owns a small building at 50% of the revenue is taxed, so after above-par keep-up there is no profits. It is just a store in value; unless you own a fleet of apartments landlords don't make much.
The obsession with home ownership did ruin the economy. It was called the 2008 recession and there’s been almost no wage growth since then while the cost of living has risen and has thus lead to a rise in populism, Trump and Brexit. The cause was banks predatory lending and cultural pressure to own homes. That is disgraceful yes. This video is is anything but.
@@plerpplerp5599 calm down kiddo, we're not trying to burst your sheltered bubble of being spoon feed information from very select sources only that feed a specific bias
I’m a homeowner and I’ve saved so much by owning my home verses renting. When an emergency situation arise, I don’t have to stress out about the high rent.
It's just a sing of our times, with focus on being single and childless, that economist look on value of things just for time of one person life. In the old times when you were buying something so long lasting like a home, you would leave it after you death for your offspring. This way over generation you could accumulate wealth.
They're arguing that the NIMBY mentality hurts economic development, which lowers your income, along with weaker renter protections which would allow you to accumulate wealth through income and not through family. If you were to rent and rent stayed roughly the same while your incomes rose then you could put more income into something like a private pension or investments which are can also be inheritance but with a lesser impact on the overall economy. All of these allow for the accumulation of wealth without the harm on future generations with poor families. The biggest factor in determining whether you will be wealthy is whether you were born wealthy- allowing the possibility that these arguably failed policies led to that reduction in social mobility. They looked at single man with no children and decent job in London compared to a four-person family with two incomes in Zurich. That's pretty much a full range of examples. I hope I'm understanding your message correctly but your English is really bad so I'm uncertain if I'm agreeing or disagreeing with you.
Considering how dynamic today's job market is, I wouldn't buy my own house unless I was way older (still questionable), had an amazing gap in the market (deals after bubbles) or had established my own business in a certain place. Having a great source of income is simply much more important nowadays.
They are forgetting that when you are renting you may be asked to vacate the house at any moment. We were renting for 8 years and then landlord decided to sell the house. That is a big incentive to buy own house
@@redking8585 ? you do know that you can get kicked out of your own house (in most countries) don't you? if you're in debt the bank (or the state) can confiscate your house and you're out! that also is a law problem...
@@vasopel Yes, I know. Get your finances in order, and buy something you can afford, pay your mortgage and the chances of that happening are near 0. It's not that difficult do your due diligence.
As a Romanian and my country being mentioned, I have to add some things: - the ownership is so big mainly because, during almost half a century of communism, people's assets were taken by the government and hadn't owned anything. Only party members were allowed to own a home. So, now it's the need to own a house, a car etc. Also, I don't think the home-ownership rate is that big because in more developed cities there are a lot of renters. - Renters don't have so laws protecting them as opposed to homeowners. - I own a flat with two rooms with my wife fo five years and before that, we lived in a rented flat with just a room. Back then, we paid for the rent for 250 euros and now we pay a mortgage of 230 euros, including all the insurances. Until two years ago when an internal political crisis broke, we paid as low as 200 euros. And this isn't just my case; many pay less for a mortgage than for rent. Some are reluctant to buy a house because they don't want to be in debt to the bank. - In 2009, the Government started a program called "The First House" which aimed to help the young couples to buy a house. half of the price was guaranteed by the state, it has lower interest-mortgages than other loans and the upfront money needed was less (5% instead of 15% of the total value of the property). Since it's inception, it helped more than 267.000 families/couples giving 5 bn euro. The side effect was capping the price market for new buildings. As of the 2008/9 economical crisis, I don't think the homeowners provoked it as there were other interests in the middle (like buying some assets/stocks with much lower prices, make some money to disappear etc.)
- in Romania everbody aspires to have a home ( 2, 3 if possible - for the lucky few ). The most aspiring thing - is to what - to have a home. People are literal in distress , like they are missing a limb or something - if they do not achive the "home ownership dream". The population prefer to be poor , and with low salarys but to have a home - that highly paid but in rental situation. Your social standing is related with having a home. If you do not have a home you are deamed to be a "pitiful" person. You are judge'd not by what you are ( as a person ) - but by what you own. 40% of house's are flats/apartaments in citys ( most of them from communist time ) , 50% are rural houses in the countryside ( easter european style , semi-informal build, no-architecture-projects just local builders ). And only 4% can be considerd vilas ( multi story-single-houses ) which are the most opulent living conditions. ( most of them in suburbia , a few inside the citys ). All the buildings are concrete , or modern termo-brick -> so durable materials as houses are inter-generational investements. Apartements & vilas cost around 60k 140k . ( with a median salary of 700 euros per month ) The price of a vila ( in suburbia ) is similar with a price of apartement in city. Cheap land price to invested in more "house" but far from the city vs. normal apartament but close in the city. It as hard to Romanians to own a house as everybody in the known world ( 20 -30 year morgages with the current salarys ) but Romanians are big saver's and are not interested it vacantions , experiences , education - but in having a house. ( they are ok with giving 70% of there income to morgage payment ).
I know a woman who owns (what she said) is a really nice house in Romania, but it sits vacant most of the year because she and her husband rent an apartment in Sausalito, CA. Maybe life is better here in Marin County, so owning a nice house in Romania is not a big deal at all.
Romania has such a huge percentage because of history. Before the communism alot of people lived at villages that resulted in houses gave through generations, and in communism they built alot of blocks and everyone got 1 apartment mostly for free and this resulted in alot of other apartments gave through generations. Yet, I don't see this as a problem. It's not the home ownership that makes the economy weak, there are alot of other reasons.
Such a poor and biased analysis with a lack of actual number full of loud statements. It is not even taking into consideration the obvious fact of owning an asset in the end.
@@ada-boyYou must be reading Rich Dad Poor Dad. Homes can be both assets and liabilities. But at the end of the day, I'd rather own a home because in most cases, one can recoup equity upon the sale.
@ Denis Piliaev - agreed - I had enough of this nonsense after 8 minutes - deeply flawed analysis based on selective data - I could go on but I have better things to do.
This is such a biased and actually false documentary : Switzerland have a low home owners ration yet it’s where people live their best life => low home owners lead to a better life. This is absolutely not true. In most of the Swiss city renting is so expensive that it is very often 3 times more expensive than the interest you pay to the bank when you own your home. And this put many retirees in difficult situation. So I don’t know what this documentary is made for but it is full of partial truths and blatant misinterpretations. So disappointed by the economist
3x more expensive? That doesn't make sense unless there is some sort of renting bubble going on. People are driven by incentives and such a difference would have driven up the price of housing and therefore mortgage interest to make it more competitive with renting. Maybe site some sources.
americans seem very eager to tell falsehoods about Europe, the level of inacuracy is always quite baffeling. They cherry pick one information about one country and try to convince american people that it's the way to go , hiding other relevent informations, limitations and consequences of each model.
There are enough key details missing in the Swiss/British comparison to make it useless: * the house buyer takes out 2 mortgages, the larger one belongs to the bank, and usually because of a wealth tax, only the low interest is paid back - the house belongs in large part to the lender *this had already driven the price of houses up by the '60s, so the 386% rise over 50 years looks stable - the franc has risen 10 times compared to the pound over the same period *There is a fictive rent which an owner pays as a tax, as a counterbalance for renters.
My absolute ultimate life goal is to own a home, this video definitely didn't change my view on this subject. No matter where you live, owning your home is very important for a stable, happy and peaceful life. It's the ultimate freedom.
Earlier it was just Shell companies, Corporations and Realtor Investment trusts buying up real estate , but now even students and people on work permit have been brain washed by our Realtors and are buying multiple properties and renting them out. Reality is that the middle class has been priced out of Canadian Real Estates as now prices are going crazy in small towns too.
You are wrong, ultimate freedom is when you own a set of skills wherever you are you are an valuable asset. That allows you to go and live wherever you want thats freedom. House is like any other thing, it can get flooded one day and then you dont own it. And from freedom it becomes prison as in 1 day you just have lost all your assets.
A desire for home ownership is a measure of a successful country / state / city. If everyone wants to rent in a certain area it's usually because they're hoping to leave as soon as possible. Or because prices are insane.
@@HieronimBuszewski we have our own flat but anyway rent in the other city for career reasons and our own one we give for renting. It's no problem. You can move wherever you want too. But we are not young forever, in my country retired salaries are so small that it's impossible to rent a flat for it.
This is a very hard thing to calculate in general, due to too many variables, Today's interest rates are historically low, which might make owning more economically sound than renting at the moment. But at 5% interest on your mortgage with a house around 500k mark (pretty average for a bigger city in Canada): mortgage interest + property tax + insurance + maintenance costs = rental payments. Whatever you consider an asset value is payed on top, so renter supposed to have this money in his pocket as well. Now if renter can invest this extra money at the same return rate as house appreciation, after 20 years both will end up with the same net worth (dow jones index showed the same 300-400% growth since 1970s). However looking in the future i can't see the housing prices to keep growing at the same rate for the next 50 years. Disposable income (accounted for inflation) stopped growing in 80s. Housing prices did not. There is no money to keep inflating this bubble forever. It burst in 2008 (with help of loose regulations), it will do it again in the future. PS: I'm a condo owner, so i'm not talking out of despair. But besides having a primary residence, i'm (being single) also renting out couple bedrooms for extra income. This double function works rather well for me. For an average family though i would not consider a house a must-have. I even considered buying rental properties in the past, but couldn't come up with a decent enough return model to get into all the hustle, that comes along. Since then i also moved around a bit and realized how much of an anchor a property could become. In general i don't see rental inferior to owning anymore from any perspective, financial including.
@@nefigushki the problem is that most people who rent in places like London do not have spare disposable income to invest. Many people in the 30s have been paying rent all their life and hold no assets and often not much savings (in a better case, while many have credit card debts). They're unable to pay the deposit to even start the mortgage and just keep paying rent without accumulating any assets .
@@arturturkevych3816, This is unrelated problem. People living paycheck to paycheck, have to do with either country's economic output being to low, or wealth distribution being shifted too much, or both. Have nothing to do with owning/renting dilemma. Same people, who can't afford to save while renting, would also be one paycheck away from going bankrupt while having a mortgage.
@@nefigushki With low-interest rates, money is cheap, and everything is expensive. With low-interest rates, you can borrow more and are in competition with people like you that can also borrow more, building competition and inflating the buy prices with little correlation with the actual demand as seen by lower rents increase. If/when interest rates go up, prices will mechanically go down. People say that with low interests it's the perfect time to buy, but taking into consideration the risks and inflated prices, a low-interest environment is the perfect time to sell and diversify. Not to mention illiquidity. Full disclosure, I've sold my fully-owned property and I am now 100% liquid with well-diversified investments that provide me a total return well above the saved rents and increase in value I used to get.
This video is ridculous. If you rent , you are still paying for maintenance, the landlord's mortgage and interest. Those costs are just buried in your monthly rent.
Multiple independent analyses have found that renting in Australia is currently economically more sound than buying. There are all kinds of hidden and known costs associated with buying, owning and selling property. Rental prices are not set by landlords but by the market. Currently renting is quite affordable in Australia. Buying is not. House prices are overinflated by investors. And inflation is not high enough to help buyers get rid of their debts fast enough to make it worthwhile.
In many ways I've found this fairly biased, especially when referring to Eastern European countries such as Romania which have a very different historical context in terms of housing..
A clear bias in the Economist's argument. The landlord class would be very happy if working people never own their home. Rent seeking has always been a hallmark of the ruling classes.
Uhh renting and paying a mortgage might end up costing the same but in one scenario you get a house. They totally didn't mention equity when doing that comparison.
Home ownership is bad if you buy a house you can barely afford with your pay packet. I rent 6 months a year and live abroad in Asia for £200 a month for the other half of the year. Believe me, a mortgage is cancer stress. In the end I have more savings, more freedom than a homeowner
I own a condo but I definitely don't think ownership is for everyone. If you can afford it and plan to live in the area for a long time (at least 5+ years) then I think it makes sense to buy and give up some of the flexibility of renting.
So what? You have more money now...but you'll have to rent for the rest of your life including into retirement. And the need to save up enough to guarantee you'll be able to afford to pay rent until death is just as stressful...or maybe you don't care and then will ask us taxpayers to help you because you made poor financial decisions.
Karl Tanner from Gin Alley I’m retiring somewhere in Asia. Living in UK is more expensive than its worth. I can buy a nice property in Asia for a years wage over here in the UK. Living in the UK is miserable and full of miserable people. Leave your box mindset
As a 68 year old in Australia I am very happy to be in my own home. I always wanted to have “a roof over my head” when I am old. Four of my sisters do not own homes so one lives under my house, one in a tiny caravan, and two rent. It’s very difficult for them but they all had opportunity to buy in their middle age but spent windfalls instead. Of course I will continue to help, but I say, plan for your old age.
I live in Australia in the house that my husband has owned since Dec 1994. As the main breadwinner he has gone through periods of unemployment. As he had the mortgage already long paid off by the time we married eighteen years ago he was not the least bit concerned. Certainly not concerned enough to move the family away from my part time job, our daughters school, my mother, our friends, and our support networks. So no matter what home ownership might do to an economy, it would seem to be in the best interests of individual families. We sure ain't rushing to sell to join the renters. No thanks.
Not really, because feudalism was a completely different economic system. Even if 100% of people rented homes in the US, there's still capital ownership by a few, not a tiered system of where you worked.
@@Montfortracing Ehh the end result is the same, i.e all land owned by an elite upper class which definitely wouldn't have to work, and like every monopoly/duopoly/oligarchy they definitely can dictate the terms (especially if you espouse the neo'liberal' ideal that governments should remove themselves entirely from citizens 'economic liberty'), meaning it IS exactly "a tiered system of 'where' (or perhaps 'if') you worked"... Except, no wait, its not the same because in feudal society the nobility atleast in theory had an obligation to protect their peasants..
@LagiNaLangAko23 "Even serfs had their "own" homes that they can build as they like". I'm afraid you are unaware of medieval European serfdom. Many were renters of their feudal lord, who owned the land and estate. Neither could they build "as they like".
@@Montfortracing - For many Capitalism is simply a more sophisticated for of feudalism. It is based on the same underlying philosophy - ownership of the essentials in life by the few who can then hold everyone else to ransom for their needs.
@@olgakuminova homeownership is financial liability. You don’t see the tax portion when you are paying rent. It could be taxes that is increasing the price of rent not a greedy landlord. Remember nightmares are still dreams. When you can’t afford a down payment do you really think some one would be able to afford a new roof, new ac unit or furnace, it drives the economy because plumbers, electricians, carpenters, tree trimmers, lawn service, and handymen are expensive when things go wrong. Don’t have foundation issues, HOA concessions, roof leak, pest problem, flooding basement, fence fall or deck rot. Then you have to take time off work to make sure it’s done properly. I pay 3500 year in taxes and insurance alone. It would be higher if you added mortgage insurance and private mortgage insurance. My rent was closer to $700 a month and most rentals came with a pool, yard and gym I didn’t have to maintain. On paper my home has gone up value but when I sell there are taxes on profit on top of realtors taking 6% of the profits. I enjoy more space, painting walls without permission and no pet restrictions but it’s still overhyped based on my experience.
A lot of people don't take into account all the additional expenses that come along with home ownership: maintenance, insurance, taxes, HOA fees, etc. For most people buying a SFH, they can expect to pay an additional $1,000 a month to service these additional expenses. I, like most 1st time home buyers, had no idea about all the additional expenses on top of P.I.T.I. I'm sure the millennial buyers of the last 2 years are feeling some serious buyers remorse at this point. This doesn't even take into account things like replacing a roof after a big storm or a leaking pipe causing a black mold problem inside the walls (that latter happened to me!). Home ownership should be approached mentally like preparing to have a baby. It's a big, hairy, long-term commitment that's going to cost you a ton of money. It can be worthwhile and rewarding, if you can afford it, but if you can't, your life is going to be a constant struggle.
My husband and I live in Japan and we rent. Some of our friends were already able to buy homes here. But Japanese houses are a bit different from other countries because instead of increasing in value overtime, it does the opposite. And because land here is expensive, almost all the new houses here look like cubes with very minimal space. ☹️ We’re thinking of just getting a simple house built in our country(Philippines) and put the rest of our finances to savings and investment instead.
I and my wife decided to live in her parents house when we married. So instead of buying new house, we simply need to renovate the existing one. Lots of money saved. It's considered acceptable to live with your parents even after marriage in my society
@@mikeb1371 Fully agree - people should be thinking like that. You're always going to pay. The question is do you want more flexibility or security? And both of those things have upsides and downsides.
Its the opposite where I live. I can rent a house here in LA county that would be a million dollar home that's too much for me to buy. Nonetheless I wud still like to buy If n when the prices aren't so effing high. Highest I've ever seen here lately. Foreign investors drive the costs up too and don't even live in the home.. among other factors.
That is perfectly fine. The problem is not that people are allowed to own homes if they choose. The problem is government subsidies for homeownership over renting and restrictions on building more housing that raise the value of existing homes, benefiting established homeowners and hurting everyone else.
After owning a couple houses over the last 35 years, you learn that the ‘rent vs. buy’ decision involves many factors. One of the most important is how stable your situation is and how long you plan to live in that house. From a purely financial viewpoint, one has should consider the ‘total cost of ownership’. Those costs are much more than just a mortgage payment. As a friend once said, ‘A house is a money pit.’ I live in Houston, Texas. Most houses in Houston will eventually have foundation damage. That bill may well cost you $20K. A roof lasts about 15 years. There’s another $10K. Periodically, the air conditioner craps out and that will put you back several thousand dollars. Paying to have the grass cut will cost $1,000 per year. Heck, if you happen to sell a house it will cost 6% of the sales cost. If your house costs $300K, that’s means you lose $18K of your equity. Even after paying off the mortgage, you will need to pay $500/month for real estate taxes. Remember all that extra money could have been put into the market and earning 5-6% per year to counterbalance house equity built up over the years. So, it’s not as simple as wife’s tales like, ‘you are throwing away your money on rent’. The only way to make a decent ‘rent vs. buy’ decision is to open up a spreadsheet and ‘run the numbers’ over a very long period of time. In doing so, you may well make a better decision. However, there’s little doubt that owning a house has many positives which we are all familiar with.
One advantage is if you want to start a business. If you need to borrow money, and most businesses do to start or expand, a bank will want something solid as collateral. They won't be interested in the business, as they fail all the time, so if you're renting your appointment at the bank is going to be a short one.
@@deaddoll1361 That is an interesting situation to consider, but it fails to recognize a key insight that many other comments have failed to realize. When you rent, you will have the ability to invest in other sources, while when you buy, you're essentially locking yourself-in on investing in the housing market. So if you were to start a business, you would have other assets as a replacement for housing which could be used for collateral.
10:15 “renting and buying property could cost the same amount over the long run” .. yes but after 20 years of renting you will have 0% of spent money converted into assets, while if you bought a house 60-80% (depending on various additional fees) of spent money actually becoming your asset. The only case when you would not want to buy is when property market is declining and rents are super cheap. Which for top economies happened only during credit crunch for 3-5 years. After that the real estate price growth has eliminated pretty much all loses.
I think you should not have taken Switzerland for comparison. This is a very special place for home ownership and you only scratched the surface: -30% of the population is foreigners, they might not be interested in staying here for ever. -the house is never really yours. There is a strange relation between banks and government where people extend mortgages for ever to have tax deductions. -you need to have 25% of the house price in cash. -small country. House ownership is only possible on the country side and many people prefer the city. - etc , etc
When we are comparing costs of ownership vs renting, shouldn’t we also consider that ownership is more like an investment where you have acquired an asset by the end of it whereas in renting you’re left with nothing in hand.
Ha! I thought the crash of 2008 had dissipated the myth of homeownership as an investment and the people had finally learned their lesson. I guess not! Home is just the place that you live in, it's not an investment.
This video was not done well. Switzerland works because according to the woman, she can rent for 20 years without prices going up? That is an extreme form of rent-control something often derided by economists. If that is the case then what Switzerland does is essentially ports over the benefits of home-ownership into renting. They basically are making a case for home ownership.
Exactly, Speaking for USA. We have limited protection for renters compared to other countries: rental agreement, eviction and protection from Foreign buyers. In Texas, I personally witnessed a landlord remove main entry door to apartments to get a 5 day late rental payment. In California, you can expect a 25-40% rent increase after the landlord does renovations. New York, Miami etc. are like London. They are places for international money laundering--walk around and you will see 40-60% of high end apartments sitting vacant.
Yes and comparing Switzerland to Romania? Not exactly similar economic opportunities over the last 50 years. Iron curtain and tax haven neutrality or what.
The only reason that I could own my own house is because my parents owned their own house, which when they passed I sold. Imagine if they had rented. Plus, and more importantly, my mortgage is 25% les than the price of renting a house.
Honestly it’s not though rented all my life made smart investments and retired aged 52. If I brought a house no way could I afford these investments. Still rent to this day and thankfully made a lot of money
Renting and owning a home can go hand in hand. A high ownership percentage in a country doesn't stop mobilisation of people. Suppose there are two guys John & Harry who own homes in two different cities. John can move to Harry's home city and harry can move to john's home city.. Both rent their respective homes to each other. Rent to be paid will be nullified by the rent received. This is how home ownership is better than renting homes. Many of the facts stated in the documentary are flawed.
@@8platypus that's not the expectation she's talking about. She's more concerned with the money making aspect of home ownership than primarily seeing home ownership as finding a place to live.
@@8platypus yes I know! Again, the problem becomes, as I mentioned, when equity is the primary reason for home ownership and not the place to live itself
Renting must be the most efficient way of taking wealth from the poorest and giving it to the wealthy or better off (buy me a house poor person) should be the landlords slogan lol
@@jimminycricket3384 I disagree. I rented through most of my twenties and early thirties and mostly every year my landlord would raise MY RENT in order to cover HIS MORTGAGE and property taxes. I paid my house off early and refinanced for a lower interest. Nope you're wrong!
The argument is wrongly presented. We are earning in currencies that have no intrinsic value and with no guarantee of future value. They do not have fixed exchange rates with any commodity, thus what I earn at young age and save will almost guaranteed depreciate a lot by the time I need it the most (old age), that is the buying power will be lost over time. To protect that saving from evaporating under the erosion of inflation, I have to take a second job and invest for a return of at lest 5% per year to offset the economic downturns (like that in 2008). If you're asking all people to do only that (save currency), imagine the waste of time and opportunity The safest and least time consuming bet for saving is in hard assets. Owning your home is by far the safest way to safe for old age You mentioned Romania in the Documentary. I grew up in that country and experienced the period with high inflation rate shortly after the 1989 Revolution. A thing stuck on my mind since then. The value of any currency can evaporate. My grandfather's lifetime savings evaporated in a matter of 1 year. In 1990, his savings could buy a one bedroom apartment in the city, or 700g of gold. One year later, the amount could buy a frozen chicken in the superstore. Only the apartment of my long gone grandparents are still owned in the family
@@Churros1616 So you suggest that he invests his money in another currency that also depreciates due to inflation instead of in assets that will grow in value?
Your argument is assuming that the money you save from renting is not put to work. If you are disciplined and invest what you save from renting in a stock and bond portfolio, you will come out ahead and be able to fund your retirement.
Same thing in Yugoslavia. Today Croatia, we save in realestate. Property tax is almost nothing. We also went through high inflation. This stick in nations mind. I dont think other countries realize this as we do. Just imagine that high inflation and beeing in a renters position. Lol.
Credit creates bubbles, not banks. Banks are bound by law and your ability to repay. They do try to mitigate the risks, but people who act like they get high on debt will inflate the bubble.
There's also employment opportunity too. Minimum wage normally doesn't cover it. Anything besides this will have massive competition. And hostile work environments, make it difficult for people to hold-down a job. Regardless of what it is.
@@sblijheid Agree. Banks or any investment can create more than just housing bubbles. So maybe the problem isn't banks but how they are regulated and obey the law. Proportion of capital to lending ratio and rules on affordability of debt can be used to stabilise the market. These should apply to both the borrower and the lender equally. I find looking at unregulated loan markets or one sided loan markets such indentured labour or mafia/gangster lending rackets so see why these controls are put in place.
I just came across this Economist video and i want to say that in all countries owning a house is important, irrespective if it is rich or poor country. It is not just an obsession.
You need to put a little more thought into your analysis. Why not own a company instead of a house? Each year a company will product more products, whereas a house just sits there rotting away.
The critical piece of information missing: Swiss have a mandatory 25% investment into a government backed pension scheme. That's why the majority of Swiss are millionaires at retirement. It IS cheaper to rent and INVEST the difference. But that isn't happening in the UK and US. Homes are forced savings for so many. The BEST thing to do in the US is to buy as quickly as possible, but a much SMALLER home or even a condo that you can technically "afford". Mortgage no more than 25% of your take home pay on a 15 year fixed income.
The fact that there is already an excessive amount of demand awaiting its absorption, despite how everyone is frightened and calling the crash, is another reason why it is less likely to occur that way. 2008 saw no one, at least not the broad public, making this forecast, as I'll explain below. The ownership rate was noted to have peaked in 2004 in the other comment. Having previously peaked in the second quarter of 2020, we are currently at the median level. Between 2008 and 2012, it dropped by 3%, and by the second quarter of 2020, it had dropped from 68 to 65.
Investing in both real estate and stocks can be prudent choices, particularly when backed by a robust trading strategy that can navigate you through prosperous periods.
@parrish8386 Could you kindly elaborate on the advisor's background and qualifications?
Thanks, I just googled her and I'm really impressed with her credentials. I reached out to her since I need all the assistance I can get.
@@leojack9090 you still messed that up, bot
Everyone seems to fail to mention that paying a rising rent when you retire on a very fixed income can put you on the street.
And so can subprime mortgage lending.
....and security ; when you know you won’t randomly have x days to move out because the landlords are moving in.
u r so right brother
It looks like Mobile RV and Van living on a mass scale might be a future trend.
Fernando Landaverde i have always said this...i dont get it
I've never met any home owner who said, "You know, I wish I didn't own this place. If only I'd spent the last 25 years renting it instead."
@@louisdrouard9211 Seriously? Why did they regret it?
That is socially unacceptable to say that in North America. Like saying you wish you never had kids. There are definitely those out there.
@@00dfm00 Maybe if you bite off more than you can chew (i.e. take on the biggest, most expensive house you can), then I can understand such regrets. but if you Don't live beyond your means, and can make ends meet each month, surely buying a property is better than borrowing one (why throw £1200 away in rent each month when you could be buying a house for the same money? One brick at a time.
@@louisdrouard9211 did they live beyond their means? Where I live, monthly rent prices and mortgage repayments are more or less the same. In fact, sometimes it's cheaper to have a mortgage (e.g. a property that costs £1200 a month in rent might only cost you £1000 in mortgage payments if you were buying it instead).
I've literally just experienced this now. My wife and I were eligible for a mortgage about 30k more than the property we went with (but we didn't want to be struggling to make ends meet each month, so we opted for a cheaper property). Before this, we'd spent time looking at rent prices - for similar properties (size, location, number or rooms, etc.) landlords were asking for more rent than the banks were asking for in monthly mortgage payments.
Imagine you have a property worth 250k, and the rent and mortgage payments are exactly the same each month, I just don't see how paying 400k over 30 years for a property is beneficial as rent, when you could spend 400k over 30 years as a mortgage and actually end up owning it.
It depends on many factors (lifestyle, age, etc.) Obviously someone with a mortgage is somewhat 'trapped' (e.g. they can't just 'give a month's notice' and ride off into the sunset), but at the same time, they can put some roots down and get comfortable knowing that noone can evict them.
The other one I've never heard anyone say "Property owners have really suffered over the last 2000 years"
In all seriousness history has taught us that it's always better to be a landowner than not to be a landowner
I'm amazed how it somehow manages to twist the 2008 financial crisis around to blame it on people taking mortgages rather than the institutions that offered sub-prime mortgages or the banks that bundled those risky loans together and sold them as "safe" commodities.
This video sponsored by bankers
>The economist
>understand
The government subsidized and pretty much mandated those loans.
@@iamhardwell2844 Because bankers don't get rich of mortgages🙄😅
An'anaviy Bank tizimi ribo ustiga qurilgan shu uchun Islomiy bank tizimida bunday bemazagarchilik ta'qiqlangan
the housing crisis wasn't caused by people wanting to buy houses, it was caused by banks allowing the lending of too much money to high risk borrowers.
... who wanted to buy a house
Which president encouraged everybody to own a home...
Which banks created 0% down. What policy back up mortgage insurance.
It was also caused by idiots bidding up the price so high the price tripled in 15 years, while wages were flat.
@@donm2067 Hey, hey, hey! This is the tone police and you're under arrest. 👮♂️🚨
You don’t live forever
People age and their earning power declines
Homeownership is an insurance against homelessness in old age
Exactly. Plus a house can last multiple generations if everything goes well.
If you start investing since your 20s, you'll end up with much more by your 60s. That's why entrepreneurs are less likely to buy houses early on.
john tenorio buy a house early, save&invest while paying off the mortgage, then invest more once the mortgage is paid off. For those buying a home in there 40s-50s, it's a much bigger gamble.
@@lefthanded5473 Save and invest early and buy a house when you can afford it. Lending money was the root of the crisis.
You are ignoring the simpme fact houses cost money to own, overall renting and owning cost the same.
Idk about Sweden but renting in Australia is basically serfdom. You can't so much as put a poster on the wall without permission. You're subject to regular, intrusive inspection as though you were a child. The properties are invariably undesirable and poorly maintained - on busy roads, no privacy, no insulation, cheap water heaters, etc. Worst of all they can, and do, kick you out whenever the lease comes up for renewal, which is no basis for a stable life and is outrageously inconvenient - particularly at times when there's a rental shortage and every property has multiple applicants.
Clearly a bias in the Economist's argument. The landlord class would be very happy if working people never own their home. Rent seeking has always been a hallmark of the ruling classes.
Unregulated? Right wing gov? No rent cap? Not enough social housing - creating demand?
Which part do you disagree with
Not if they have loads of money. If they don't, and they're responsible citizens, then they kind of are.
Sounds to me like you just have poor tenant protection laws over there? I live in Germany and I can do whatever I like to my flat, I've never been "inspected", it's recently renovated and a decent location, and my landlord can't increase my rent unless they make some improvement to the building that I materially benefit from.
I bought my appartment in Madrid 8 years ago taking advantage of the once in a lifetime low prices of housing caused by the financial crisis in Spain. Now I pay for the mortgage less than half of the price of a rent for a similar house in my area and I could sell it for a price that doubles what I paid for it back in 2013. I'll be a mortgage-free man in my 40's in a city where most of the people of my generation and younger are really struggling to pay the rent of their small-shared-expensive houses. Do you really wonder if I have ever regretted my decission?
"An obsession with home ownership"
Maybe that's just "a healthy desire to have a stable and predictable living situation"
The idea of "Home ownership" is what banks are building their campaign upon.
Also a desire to be a part of your community for the long term and not just a transient employee.
majority of people in Switzerland , big cities in china rent are you saying they don't have a healthy desire to have a stable or predictable living situation.
@@victoneter don't forget that it's an asset which appreciates in value
Exactly. Also, rich people collect rent - not pay it.
I have been staying in rented homes since I was toddler. Family can't afford to buy. Lost count of the places I have stayed throughout KL and Selangor in Malaysia. When I started working I saved enough money to buy my mom a house. I was 26 at that time and the commitment does scare me a bit. The look on my mom s face when we finally own a house is priceless. I have given her stability. 10 years later never once regretted buying the house. Rental and house price has crept up so much. Different reasons for every person and country on renting or buying a home.
@Matt L Sure. There are risks with every investment vehicle (stocks included). If all else fails at least I d still have a roof over my head.
@Matt L hello please check and recheck definition of investment vehicle. Thank you!
@Matt L Lies. Where I live my house payment is HALF the price of rent. You sir are an idiot.
@Matt L And you're at the mercy of the whims of your landlord. And even if you weren't, the advent of the short-term lease will drive up rent and ownership costs regardless of the middle class deciding not to own property.
@Matt L You are ignoring the fact that you have to live somewhere, you can't just put that money on stocks, because you need to pay rent and utilities as well. Why waste that money on rent, when you can pay for your house and actually have an asset. Specially if home prices are increasing.
Home ownership isn't the problem. The Global Recession was caused by banks lending too much to people who clearly couldn't afford it.
Exactly.
Oliver Walker and the government bailed out banks and industries before because of the “too go to fail” so it signalled banks could be reckless because Uncle Tom would there to bail them out of any issue.
The problem isn't home ownership per se, but politicians _listening_ to home owners. This is an almost unavoidable democratic problem: the eligible votes to whatever city council you want to stand for is inevitably going to be home owners, while the beneficiaries of development projects are largely the people who don't (yet) live there and don't (yet) have a vote. This creates immense pressure towards being overly restrictive. Short term the home owners win, long term everyone loses.
Singapore is actually the exception that proves the rule: it's both rich and has a high home ownership rate, but it's also a draconian one party state with leaders who have much less need to pander to the rabble.
Buying more than what they could chew...
@@theadam7598 - the Government is us. WE collectively bailed out the banks.
Let me think. Would I rather spend 30 years paying rent with no asset to show for it and still having to foot the bill for housing in retirement… or spend 30 years paying the same amount, have an asset to show for it, no housing costs in retirement and something that I can pass on to help my family after I’m gone?
Seems like a pretty easy choice to me.
Right! They didn't mention this option.
If you take the money you would have saved for a down payment and invested it into the stock market, you wouldn’t have nothing to show for it. In some situations buying may be better value, but if you are disciplined renting can be just as viable if not better for building generational wealth.
@Richard Jackman and you say that as home prices are starting to fall due to rising interest rates. This is cherrypicking.
(Note: All of this short term stuff is irrelevant if you are in a financial position where you don't have to sell your house or your stocks and can hold for the long term.)
As for the veracity of kashmoney's statement, I haven't seen anything to suggest that the risk adjusted returns of the real estate sector are higher than other sectors, but ordinary people can dial up the risk and expected returns in real estate with leverage (e.g. a mortgage) in a way that they couldn't elsewhere.
@Richard Jackman You've only established that 11 months is the timeframe YOU care about (the previous poster said nothing about 11 months and his statement, made during a bear market, suggests a longer term outlook). If 11 months is your investment horizon, you should not be putting the money in a house or stocks. It is common sense.
A more fair assessment is that VTI (a US total market cap weighted index fund) has had an average 7.5% annual growth since inception, meaning that it is a viable way to gain wealth. In other words, the poster wasn't entirely wrong.
The second thing is that, you intentionally seem to be ignoring what rising interest rates will do to some of the more overvalued property markets (this is already visible in some of the more overvalued US and Canadian markets).
Remember: the Economist is not a journal made for the working class interests, it's made to spread the ruling class ideology, be careful when watching their videos!
I completely own my home and its wonderful not having to pay rent or a mortgage for where you live.
Still have taxes and insurance. For me this is the equivalent to 5 months of my last rental. My furnace going out covers the rest of the year
@@joyaustin6581 lots of other costs but atleast no mortgage
My home is paid for when you add my real estate taxes and house insurance they amount to less than 200 a month where can you rent for that? Even when you factor in a new roof a new Heating & Air conditioning unit I'm still ahead compared to rent
Your property tax is more than my rent. You lose.
@@joyaustin6581 And your rent would have to cover for that as well and still make profit for the landlord.
What about the investors destroying the entry-level housing market?
REITs absentee landlords should be banned, prohibited, forced to divest.
And no one apartment or housing rental company should ever exceed 10% of the market share in a 100 mile area. They've bid up the prices as investors with low interest rates seek a return, they piled in to REIT's which are forced due to their prospectus to buy up real-estate, they can't sit on the cash. And they do it sloppy paying well above asking prices to close deals, even accidentally entering bidding wars with their own agents in their own fund... cartoony idiocy.
That’s what’s happens when you the government put more investment incentive on housing market over the stock.
Thank you. I'm trying to buy a house gave up and looked for rentals and saw hundreds of starter houses for rent. I'm priced out, inflated prices. It's not an asset it's a necessity, they should buy luxury houses but not starter homes.
Ann Otter if investors that buy foreclosures and renovate them wouldn’t increase those barriers because They are still pricing out a lot of people. There are no true “starter homes”
it is not the Banks or investors destroying the entry level housing market - it is the intentional Government / RBNZ policy to print digital money continually that dilutes buying power of the existing M3 money supply in circulation - do the math! homeowners and investors are simply hedging their savings as sanctioned and fostered by Government policy. it is a store of asset buying power. refused to buy shares after the '87 crash, i will never forget the look of my Accountancy tutors face as she walked into the lecture theatre on black tuesday , i bought property instead and never looked back - a humble 90 m2 house i bought in Berhampore for 25K in 1989 sold for $1.05 M - so again - do the math
They should change the title of the video to “How landlords want to keep poor people poor”
How landlords want to keep poor people fool
Landlords are thieving domestic Terrorist parasites.
or "You will own nothing and you will be happy"
they did mention that in the video. but again this is a failure of policy in many countries who leave the elderly on their own without adequate supports.
exactly.
I think a housing crash will happen because all those people who bought homes over asking price, although it was at a low interest rate, they are over their heads. They have no equity if the housing prices continue to go down, and if for whatever reason they cannot afford the house anymore and it goes into foreclosure because even if they try to sell, they will not make any money. I think this will happen to a lot of people especially with the massive layoff predicted for the future and the cost of living rising at a high speed.
For 2023, it’s hard to nail down specific predictions for the housing market is because it’s not yet clear how quickly or how much the Federal Reserve can bring down inflation and borrowing costs without tanking buyer demand for everything from cars to homes.
Interest rate is currently at 4.75%(8th rate hike since March last year) Inflation at 7% and mortgage rates is at over 7.5% but yet minimum wage remains the same and my retirement portfolio has suffered tremendously these past years, so my question is how do senior citizens retire and live off such unstable economy. The long term game is obviously not for me at this point.
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@@joshbarney114 I will be happy getting assistance and glad to get the help of one, but just how can one spot a reputable one?
@@sophia253 My advisor is “Colleen Janie Towe” is a highly respected financial consultant in the industry. For further information or to connect with her, a simple online search with her name will suffice. I wish you every success in your endeavors
“Over the long term” rent and mortgage cost about the same - yeah but you can sell one of them - how is this not mentioned?
I think it costs more to own. Being a landlord and an owner I have a perspective on both balance sheets and in the longer term it's surprising how equal they are. I'm a lucky sod, I know, but made loads of sacrifices when I was younger and for example even now do not take 'holidays' as I enjoy building maintenance. Avoiding children and divorce were other massive cost saving measures. Owning does give you more security and power over your own destiny which for me is the decider.
So true it’s a asset that if your even semi intelligent about how you buy and where you buy it you can sell it for as much if not more than the however much you originally bought it for
But they did mention that owners do not sell as much as is needed. I know so many people, including my parents who've been living in the same property for as long as I've known them. My grandparents have been living in their home for more than sixty years and it's become worth so much more now (even adjusted to inflation). But they're not selling it because they're living comfortably so why would they?
Do the math or review previously done calculations when he says is equal that is exactly what I means. The reasoning is behind home buyers tend to by more than they rent. One rent $1000 then buy for 1500 a month. In the long run is the same.
With mortgage, you know what you owe each year. With rent, you have no idea what you have to pay the next year, next year, and next year... In my last rent, my rent increased $600 per month in 2 years.
The problem with home ownership in the US is that everyone wants to make a buck, not own a home
This is a terrible documentary, they are conflating too many imponderables and forming grandiose conclusions.
Yeah because the financial industry wants you to view your home as an investment so that they can extract more and more money out of you.
Exactly, wealthy people invest in real estate to make more money, meanwhile people who actually need places to live can't afford them.
Thats true. They must blame speculators and not home ownership. Greediness can ruin everything.
Man you nailed it 👊 the funny thing is people are STILL asking silly questions like "why the prices of homes are going up?"
I wonder how the video has 8 times more likes than dislikes when about 90% of the comments are negative?
Cause the critics just went right into the comment section and forgot to go back up and hit the dislike after they post their comments lol
London has a ridiculous housing price.
@@zheli655 biased
Liking a video like this doesn't necessarily mean you agree with the conclusions but rather that you are interested in the content and would like the youtube algo to serve you more such content
Negative people talk more than others and insist that everyone listen to their moaning.
I think it's time to make it more appealing for potential buyers. Real estate can be quite the rollercoaster! the stress and uncertainty are getting to me. I think I'll cut rents to attract potential buyers and exit the market, but i'm at crossroads if to allocate the entire $680k liquidity value to my stock portfolio?
"Overall, buyers hold a lot of the cards right now, and sellers are having to give out more concessions to close a deal." All the best, buying on sale is actually one of the best ways to invest in stocks, and advisors are ideally suited for such task
Until the Fed clamps down even further I think we're going to see hysteria due to rampant inflation. If you are in cross roads or need sincere advise on the best moves to take now with financial markets will be best you seek a fin-professional with fiduciary responsibilities who knows about mortgage-backed securities for proper guidance.
@@mellon-wrigley3 That does make a lot of sense, unlike us, you seem to have the Market figured out. Who is this consultant?
Gertrude Margaret Quinto is the licensed advisor I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment.
I copied her whole name and pasted it into my browser; her website appeared immediately, and her qualifications are excellent; thank you for sharing.
The effects of the downturn are beginning to sink in. People are being impacted by the long-term decline in property prices and the housing market. I recently sold my house in the California area, and I want to invest my lump-sum profit in the stock market before prices start to rise again. Is now the right moment to buy or not?
If you are new to the market, I recommend seeking professional assistance. The most effective approach to creating a well-organized portfolio is to begin with a professional who is knowledgeable about the turbulent yet profitable market.
Over the past three years, I have been working with a professional who has provided daily guidance on my investment decisions. With their expert analysis, I have realized gains of over $1 million. Their insights have helped me avoid losses and capitalize on market breakthroughs, particularly during downtrends.
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Can't divulge much, it's only right you do your due diligence. I'm been guided by “Margaret Johnson Arndt” and most likely, the internet is where to find her deets.
Thank you for this tip. It was easy to find your coach. Did my due diligence on her before scheduling a phone call with her. She seems proficient considering her résumé.
as someone who lived in Switzerland, it's very clear to me that this "film" is more entertaining than educational, because obviously the reason why in Switzerland there are so many renters is that the houses are just so crazily expensive that nobody can afford them, and it just so happens that they have probably the greatest law institution when it comes to balancing rights between people etc.
Did you watch the video? House prices in Swiss have only risen 70% to Britain's 340%. I'm sure it's still expensive but it's clearly not like in other countries.
Switzerland is the example they always go to. It's how they sold Brexit to the masses. That we would somehow be the next Switzerland...
Don't fall for it people. The Economist clearly has a specific agenda serving very specific interests...
Did you watch the end, UK government subsidies it's homeowners on a massive scale driving up house prices. Also it could be measured in local currency, so divide by 6 conservatively. that currency really got handed down.
Switzerland is one of the few countries that tax imputed rent, taking away one of the tax cuts home owners get in other countries. Further, pension funds invest heavily into the housing market, for better or worse, but definitely outcompeting homeowners.
As a Swiss living in the UK i can tell the reason why you'd want to buy in London is because as a tenant you have zero rights and every other apartment is mouldy, wet and cold.
Students are not accepted, pets are not allowed, minimum contract duration of 2+ years, basement apartments, it's a bedroom if it fits a bed etc etc. There are laws against this exploitative behaviour in Switzerland.
The Economist would like to thank the millionaire landlords of the UK for the funding to make this documentary
next video, why working 12 hours a day would make your life better....
they state that buying bring more problems than renting, then they talk about the crisis in 2008. as if people buying homes was the cause of it but not the banks and the financial market taking too high risks for the sake of biggest interest.
Yes, thank you. Seems like a massive ad to create a renter's market.
True! Totally biased
did you actually watch the entire video?
Back in the day, when I purchased my first home to live-in; that was Miami in the early 1990s, first mortgages with rates of 8 to 9% and 9% to 10% were typical. People will have to accept the possibility that we won't ever return to 3%. If sellers must sell, home prices will have to decline, and lower evaluations will follow. Pretty sure I'm not alone in my chain of thoughts.
If anything, it'll get worse. Very soon, affordable housing will no longer be affordable. So anything anyone want to do, I will advise they do it now because the prices today will look like dips tomorrow. Until the Fed clamps down even further, I think we're going to see hysteria due to rampant inflation. You can't halfway rip the band-aid off.
Home prices will come down eventually, but for now; get your money (as much as you can) out of the housing market and get into the financial markets or gold. The new mortgage rates are crazy, add to that the recession and the fact that mortgage guidelines are getting more difficult. Home prices will need to fall by a minimum of 40% (more like 50%) before the market normalizes.If you are in cross roads or need sincere advise on the best moves to take now its best you seek an independent advisor who knows about the financial markets.
I will be happy getting assistance and glad to get the help of one, but just how can one spot a reputable one?
Carol Vivian Constable is the licensed fiduciary I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment..
She appears to be well-educated and well-read. I ran a Google search for her name and came across her website; thank you for sharing.
WRONG the ‘obsession’ for homeownership WAS NOT the reason the financial market crashed in 2008. I’m shocked this clickbait comes from the economist.
The Great Reset propaganda machine begins
Not it's quite true. Yes the Banks were highly responsible for the predatory leading practices. But if it wasn't with the cultural obsession with ownership, and be open to being preyed on. There would have been no prey for banks to make mortgage profits.
@@ottottotto980
If the government and federal bank didnt bail out or insure the banks making high risk payments then the equation is pure profits regardless of the outcome.. If it fails, the government outs in the difference, bank takes the property and sell it again.. If it succeeds you pocket the profits..
If the government stops insuring these high risks individuals then the bank wouldnt have loaned these people in the first place
The quality of Swiss housing is impossible to exagerate. I'm a housing architect working in London and it seems like 90% of the projects that really get the office excited are Swiss, we dream of delivering such successful and varied projects.
Instead we design to minimums, ramming as many units on site, because that's all developers pay for and our housing market is basically just about delivering a commodity now.
We need a rethink of our housing market not just because it's unaffordable, but because it results in the poor quality housing that a rich city like London should be ashamed of.
Have you tried to rent in Swiss?
A million rules and red tape, comparing to "I make my own rules" when you are in your own house 🏠.
Video does not address that at all.
@@vazicus there's a limit to that too with zoning, property tax, HOA and permits needed to make changes.
Leerill Same in USA. I lived in the mid Atlantic region near NYC. So housing was built in tightly packed groupings to maximize land use
I moved to a low cost southern state where land is abundant. Individually built homes here do have large lots and in some cases acres to build on. But all the planned developments no matter how big the land it’s built on are very much like your description of the London market. Beautiful homes packed tightly together to maximize the developers profits.
i would never ever buy a new build. there thrown up and as you say basically treated like a commodity.
Same in almost every big city in Asia - Bangkok, Singapore, Hong Kong...
I’ve never met anyone who regretted buying their house.
Did they paid it off right away at the start, or does it goes over a loan?? Let me make it clear: till the rest of the loan isnt paid back- it cant be called theirs. This is the illusion or some sort of impostor syndrome.
@@mikahist4155 incorrect
@@mikahist4155 its the most easy and logical way to secure retirement... keep renting forever, rent prices rise with inflation and as a retired person your income wont rise with inflation.. it can be troublesome. sorry for bad english":)
if interest rates start shooting up it wont be long before you will
i regret it‼️
Home ownership is about protecting against worst case scenario. When you retire or lose your job or get too old to work, at least you have a home of your own to live in.
But imagine if rentals are dirt cheap. You wont have problem securing a place to stay.
@@tohneyteoh But rentals aren't dirt cheap, rents have been going up by a lot.
@@tohneyteoh find sompelace wich your rent take less than 15% of your monthly budget
In american city it’s impossible
@@tohneyteoh You are right. Most Anglo-saxon countries believe that homeownership is inherently safe, whereas rentals are not. However, the advantage of homeownership over rental lies in policies that only reinforce the "benefits" of owning while further discouraging renting. Tenure neutrality should be the norm, what is currently needed is more policies ensuring stable and affordable rentals in order to balance the benefits from both tenure forms. Rising costs are not only driven by supply, but also by demand, which is itself artificially reinforced by homeownership-driven policies.
@@jdenino6022 because you retards keep banning affordable housing developments from being built...
Inflation hits people a lot harder than a crashing stock or housing market as it directly affects people's cost of living that people immediately feel the impact of. It's not surprising negative market sentiment is so high now. We really need help to survive in this Economy. The fin-Market;s have underperformed the U.S. economy as fear of inflation hammers the prices of stock;s and bonds. My portfoliio of $250k is down to $192k any recommendation;s to scale up my return;s during this crash will be highly appreciated.
You have to get a financial-advisor/broker to aid you diversify your portfolios to include commodities, inflation-indexed bonds and stocks of companies with solid cash flows, as opposed to growth stocks where valuations were based on future potential earnings.
I agree, my proffit have been quite consistent, regardless of market situation, I got in early 2019 and the constant downtrends and losses discouraged me so I sold off, got back in Dec 2020 this time with guidance from a portfolio-adviser. I found her on a CNBC interview where she was featured and reached out to her afterwards. long story short, its been two years now and I’ve gained over $85ok following guidance from my inveestment adviser.
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There’s a fundamental flaw in this argument. The difference between renting and buying is that after 25-30 years you actually own the house you lived in. Whereas by renting that house, you never actually own it but pay off someone else’s mortgage on that house
It is true that when you buy a home with a mortgage, you will eventually pay off the loan over time and own the property outright. This is not the case when you rent a property, as you are simply paying to use the property for a set period of time, typically on a month-to-month basis.
However, when you buy a home, you are responsible for the costs of maintaining and repairing the property, as well as property taxes, insurance, and other expenses. These costs can be significant, and they can add up over time. Additionally, owning a home can be risky in the sense that you are more exposed to fluctuations in the housing market and interest rates. If the value of your home decreases or interest rates rise significantly, you may find yourself in a difficult financial situation.
Renting, on the other hand, can offer more flexibility and lower upfront costs. When you rent a property, you typically only need to pay a security deposit and first month's rent, whereas buying a home requires a down payment and closing costs. Renting also allows you to move more easily if your circumstances change, such as if you need to relocate for work or if you experience a change in your financial situation.
In summary, while it is true that owning a home allows you to eventually own the property outright, it is important to consider the costs and risks associated with homeownership as well as the benefits and drawbacks of renting. The decision to rent or buy a home ultimately depends on your individual financial situation and lifestyle preferences.
did all the landlords get together and write this? lol
Nope, penniless journalists with agenda's that don't involve home ownership for them - or for you for that matter.
More a less. Coservative journalist appointed by their chief that at the same time was ordered by an average european conservative with a wealthy position that surely owns his own house.
@@jipm92 This is a left leaning outlet and continuously pushes contented oriented around globalism and neoliberalism.
Who are the real landlords?
You know what also ruins the economy? unsustinably high rents (increasing homelessness, decreasing consumer spending, forcing more people to "roommate" with strangers or live with parents, losing more than 30% of stagnant poverty wage income to rents, etc)
It's up to 60% of your net income in Israel. Outrageous.
And obsession with homeownership causes that because homeowners are more likely to lodge protests against new construction and development that would help reduce rents by offering more supply.
Henry George entered the chat
@@NAUM1Any new supply should be reserved for first-time buyers and not landlords. Why rent when the home can be yours...
I have lived in Switzerland for 4 years and I can say that even renting a home is a disaster there. You may need to be in the queue from months to years!!! just to find someplace to rent and when you do, although the prices may look stable, you need to leave the property anytime the landlord wishes to use the property herself. I love your videos but this one is biased in my opinion and did not investigate thoroughly enough.
I hope everything is going well economically for you:-)
Thank you for raising this
So where do you live whilst waiting in the queue?
You need to understand that if you own a property in switzerland, following is important to take into account: Anyone who owns residential property must pay tax on its imputed rental value as fictitious income at the federal and cantonal level. (mas) The imputed rental values may not be less than 60% of the average market rent at the cantonal level and not less than 70% at the federal level.
This might be an explanation, why the rate of ownership is that low.
@@francozipperling29 wow, thank you that does explain a lot!
Is that charge incurred monthly for the duration of ownership?
"How an obsession with home ownership can ruin the economy"
- Landlords all over the world
im a landlord and i highly approves this.
@@nzmak3220 exactly - only landlord should own homes- multiple homes :)
💯💯💯
London has a ridiculous housing price.
@@oliverm1255 unintended consequences - how's London's rent prices compare? if you raise taxes on home owners (the landlord) do you really think the landlord doesn't raise the rent to pay for it?
The high home ownership rate in Singapore is a bit of a misnomer, most people live in government subsidized public housing, even if they technically own it. It would be stronger to argue that if anything, Singapore proves that more government regulation over certain sectors of the economy can lead to a more stable country, not that high home ownership rates create stability
Technically all the "houses" in Singapore are more like Condos, so even if you look at from a Government sponsored condo perspective you still arise at something completely different than the random neighborhood models of other cities.
To be honest you can argue that the US government subsidizes the housing market too. There's a ton of insurance and government intervention in the mortgage market on behalf of the borrowers.
Didn’t the dyson guy lose money buying a fancy place in Singapore?
Lol, prove what? Singapoure it's a city, not a big country with hundreds cities and thousands villages, just try to explain me (i am from Russia) how goverment controls will work well in such big country like US)
In Singapore all public housing (and a big percentage of private condos) are leaseholds. The state owns the public housing (and the land of leasehold condos) and citizens buy a lease for 99 years (if new) or whatever is left (if second hand). Reason being is that land is scarce and need to be redistributed again. However no one knows for sure what will happen when the lease expire. Officially it's taken back by the state, what social issues that will create and what the solution will be we will see when starts happening in a few decades
What I found to be the last straw was the never-ending increase in rent. After 15 years of renting with places in similar settings and with similar amenities, rent had nearly doubled in that time. It was literally only a couple hundred more a month for an actual mortgage.
It took you 15 years to work that out
Right
Atleast you could travel the world. That's the best thing about rent
I rented for 10 years and my mortgage now is half of what my rent used to be. Of course when you take into account rates, insurance, and maintenance costs it works out the same. But when the mortgage is paid I will have a forever home and will bring more security in old age. So I believe buying is better and definitely feels more secure.
Why would it bring more security in old age? Because you can sell it for money? My grandma owns her home and she is too old and disinterested in selling and making money. There is no difference for her if she would have been renting or owning now. Her money is locked in her home. She doesn't use money anyway. If she was renting she would be secure too. Can't be kicked out, not in my country Sweden anyway
There are better ways for a society to provide for the aged than destabilizing the real estate market through misguided housing subsidies.
@@testtestsson4927 when you old can't make money or something happened, you know you own the roof on your head. You can sell it, or you can give it to your children. Houses and lands are the most valuable inheritance in my country.
The future: the powerful own everything and the masses rent everything from them.
you mean govt?
@@rajanrangarajan8401 No. The ruling oligarchies.
It's the future of the world Neo feudalism, you don't own anything and everything it's subscription based, it's everywhere from spotify to the whole issue with right to repair.
I was recently looking for somewhere to rent in London and happened across this new build to rent phenomenon. One of the companies that seems to have literally bought up half of London, gutted it and maximised the number of little boxes it can legitimately rent out actually said on their prospectus that they were providing a solution to millennials unable to get on the housing ladder...now you can rent one of their shoeboxes for a minimum of £1500 pcm for life and when I say shoeboxes I’m talking studio apartments, you want a 1 bed...you’re looking at £2000pcm! Our lives are going to turn into an endless reel of renting and subscriptions if we dont do anything!
And the powerful will call it "A sharing economy" ;)
Everyone complaining about renting didn’t watch the vid at the part where Swiss renters have strong tenant protections. Of course renting seems less appealing than ownership for everyone else! We don’t have such protections.
And how clean and specious was the apartment.com0are that to carp in London.
exactly, check out Munich in comparison, very low ownership, prices have gone up almost exponentially. Renters are exploited all the time in Germany *and* ownership has gotten very expensive as well
ilovecomputers amen to that! If western governments increased protections the housing crisis wouldn’t be as awful as it is now.
Same in Netherlands. Rent capping too. Not that a black market doesn’t exist.
Throwaway Alex - in some parts of Europe it does.
This piece sounds like it was written by a landlord. As a mom and pop landlord renting a part of my primary home I still think owning a home is the best way to go. I think the banks are mostly to blame when they lend on extremely high risk loans without education and the slow increase in wages versus housing cost. I’ve bought both of my homes via a small down payment loans. Otherwise I would never have been able to own as a millennial.
Just because you think it doesn't mean it's true. Back it up with data.
@@LRF49 child
@@Woke-CardBoard Wokoso
@@LRF49 okay child
@@Woke-CardBoard Okay wokoso
A severely biased video that misses so many counterpoints it can only be deliberate.
Exactly what I’m thinking!
Second this!
So many parallels are made with such a level of generalization that at the end nothing is relevantly argued. It’s sad to say it out loud, but this video is clearly made with an agenda in mind.
Why would they ruin their point?
homeowner?
That's journalism in the 21st century. Journalism isn't journalism anymore. They're all extremely biased documentarians.
Everyone who makes this argument OWNS their home. Funny that.
im a landlord and i highly recommend this video.. hahahahaaa
@@nzmak3220 Funny.
I don't. I sold my flat in March and am now renting. Much less hassle and I'm paying less than I was due to not needing buildings insurance, no repair bills, the same monthly payment as my mortgage was and no factor bills. The stress of selling was an absolute nightmare and I didn't even technically make a profit. Never again.
@@pnklady3788 where I live, rent is higher than mortgage payments. A 2 bedroom apartment is now $1500 with no utilities included. A mortgage is 500-$1000 a month and you need to pay utilities. Every year the cost of rentals goes up, but income does not increase. Cost of living keeps increasing as well. It's like renters here are doomed to fail if they get sick, loose a job or face some sort of emergency.
I rent and have no serious aspirations of owning a home.
Why didn't they mentioned that the problem with the mortgage crisis was caused by ever low regulations on who can get a loan?
Because that's not entirely what happened. There was predatory lending practices that treated homes like slot machines. When the economy crashed and those variable interest rates went up....
And selling people on buying a house more expensive than they could afford when a lesser house could have been managed.
Nonsense, in case you didn't know, banks want to make money. Why would they lend to people who couldn't afford? They were encourage by the federal reserve via low interest rates and subsides, and lower standards encouraged by the government. In a free market, these loans wouldn't have been made.
@@tessbennett3796 smart people should and did get fixed rate loans
@@Tony-hx2fj I mainly agree with that but banks are not the victim here. They started playing with subprime loans and derivatives and then got burned. It wasn't poor people who caused the '08 crash.
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@Georgina Louis please who is the expert guiding you? i have lost so much as a beginner investing into stock without a proper guidiance of an expert.
@Georgina Louis This is useful information; I copied her whole name and pasted it into my browser; her website appeared immediately, and her qualifications are excellent; thank you for sharing.
Pure bs from Economist, when you buy home it's yours forever and your kids can live there without need to pay rent and they would be safe from becoming homeless. You said it yourself that paying rent and mortgage is almost the same, so we should all rent forever and own nothing instead of buying something which will be ours and give us safety. I like your logic @Economist 🙄🙄🙄
But your children still need to pay taxes ;(
Property taxes would like to have a word with you.
@@rock3tcatU233 Still way way cheaper than renting all your life ✌️
@@ssruiimxwaeeayezbbttirvorg9372 Assuming 1% property tax, inheriting a $1,500,000 home would run you $15,000 annually in tax or $1,250/month which is what many suites are renting for in large cities right now. $1,250 a month for what could be a small mansion? Sure, I'll take it.
No property taxes in the UK, just “council tax” that the occupant of a property pays, whether they own or rent. About £130/month for an average house.
By owning a home during my working years I paid, over 35 years, less on mortgage and property tax than I would have paid on rent. It also had a fixed payment which was a great help in budgeting and also a substantial income tax reduction. Thanks to the appreciation over the years I was able to retire and buy a new house with no mortgage. To me that was the dream when I originally bought a house, and the dream came true. The 2008 housing bust was caused by poor lending practices and financially unsophisticated borrowers.
Yep. If inflation were "normal," owning would be an even better deal. By the time my mom's house was nearly paid for, her car note was double her monthly mortgage payment.
Your home has only appreciated in value because there aren't enough homes for people to live in, and this appreciation causes people to prevent homes from being built since it is in their interest. That is what this video is about.
This report is just aliens reading statistics. The lack of understanding of history is oddly compelling. 10/10
Can you believe that people are obsessed with having pretty much the only stable investment you can get for the same money or less than renting. WILD!
I am a rich landlord and I approve of this message
Ofcourse you do. 🤣
The Trickle-Up economy in motion!
You are sincere.
Me too.😉
Idk man my family owns a small building at 50% of the revenue is taxed, so after above-par keep-up there is no profits. It is just a store in value; unless you own a fleet of apartments landlords don't make much.
Next up from the Economist: "How an obsession with getting paid for your work can ruin the economy". This video is absolutely disgraceful.
🤣😂🤣😂🤣😂 what work.
The obsession with home ownership did ruin the economy. It was called the 2008 recession and there’s been almost no wage growth since then while the cost of living has risen and has thus lead to a rise in populism, Trump and Brexit. The cause was banks predatory lending and cultural pressure to own homes. That is disgraceful yes. This video is is anything but.
moodswings, bravo, you've summed it up!
I always feel like the Economist is some sort of propaganda enticing people to adopt whatever new trend is needed for the rich to get richer.
Where is your evidence? Feelings are not facts
@@plerpplerp5599 take it easy mate,comment section isn't hard talk.
@@plerpplerp5599 calm down kiddo, we're not trying to burst your sheltered bubble of being spoon feed information from very select sources only that feed a specific bias
Plerp Plerp
Calm down bro!!!!!!!!
Why are you getting so worked up and angry????
Lol was thinking the same thing watching this
"Don't buy houses plebs leave ownership to your elite"
I’m a homeowner and I’ve saved so much by owning my home verses renting. When an emergency situation arise, I don’t have to stress out about the high rent.
It's just a sing of our times, with focus on being single and childless, that economist look on value of things just for time of one person life. In the old times when you were buying something so long lasting like a home, you would leave it after you death for your offspring. This way over generation you could accumulate wealth.
They're arguing that the NIMBY mentality hurts economic development, which lowers your income, along with weaker renter protections which would allow you to accumulate wealth through income and not through family. If you were to rent and rent stayed roughly the same while your incomes rose then you could put more income into something like a private pension or investments which are can also be inheritance but with a lesser impact on the overall economy. All of these allow for the accumulation of wealth without the harm on future generations with poor families.
The biggest factor in determining whether you will be wealthy is whether you were born wealthy- allowing the possibility that these arguably failed policies led to that reduction in social mobility.
They looked at single man with no children and decent job in London compared to a four-person family with two incomes in Zurich. That's pretty much a full range of examples.
I hope I'm understanding your message correctly but your English is really bad so I'm uncertain if I'm agreeing or disagreeing with you.
True. I think one can add: "People used to live in one town for their whole life." This is not the case anymore.
I don't think your average European peasant accumulated wealth.
Considering how dynamic today's job market is, I wouldn't buy my own house unless I was way older (still questionable), had an amazing gap in the market (deals after bubbles) or had established my own business in a certain place.
Having a great source of income is simply much more important nowadays.
Except, we see in ither countries people with families choose to rent. Because it's down to government policies.
They are forgetting that when you are renting you may be asked to vacate the house at any moment. We were renting for 8 years and then landlord decided to sell the house. That is a big incentive to buy own house
this is a Law problem
@@vasopel No, it's a not owning your home problem.
@@redking8585 ? you do know that you can get kicked out of your own house (in most countries) don't you? if you're in debt the bank (or the state) can confiscate your house and you're out! that also is a law problem...
@@vasopel Yes, I know. Get your finances in order, and buy something you can afford, pay your mortgage and the chances of that happening are near 0. It's not that difficult do your due diligence.
@@redking8585 you are forgetting: economic recessions, illnesses-accidents, layoffs, floods, tornadoes etc ..
As a Romanian and my country being mentioned, I have to add some things:
- the ownership is so big mainly because, during almost half a century of communism, people's assets were taken by the government and hadn't owned anything. Only party members were allowed to own a home. So, now it's the need to own a house, a car etc. Also, I don't think the home-ownership rate is that big because in more developed cities there are a lot of renters.
- Renters don't have so laws protecting them as opposed to homeowners.
- I own a flat with two rooms with my wife fo five years and before that, we lived in a rented flat with just a room. Back then, we paid for the rent for 250 euros and now we pay a mortgage of 230 euros, including all the insurances. Until two years ago when an internal political crisis broke, we paid as low as 200 euros. And this isn't just my case; many pay less for a mortgage than for rent. Some are reluctant to buy a house because they don't want to be in debt to the bank.
- In 2009, the Government started a program called "The First House" which aimed to help the young couples to buy a house. half of the price was guaranteed by the state, it has lower interest-mortgages than other loans and the upfront money needed was less (5% instead of 15% of the total value of the property). Since it's inception, it helped more than 267.000 families/couples giving 5 bn euro. The side effect was capping the price market for new buildings.
As of the 2008/9 economical crisis, I don't think the homeowners provoked it as there were other interests in the middle (like buying some assets/stocks with much lower prices, make some money to disappear etc.)
- in Romania everbody aspires to have a home ( 2, 3 if possible - for the lucky few ). The most aspiring thing - is to what - to have a home.
People are literal in distress , like they are missing a limb or something - if they do not achive the "home ownership dream". The population prefer to be poor , and with low salarys but to have a home - that highly paid but in rental situation. Your social standing is related with having a home. If you do not have a home you are deamed to be a "pitiful" person. You are judge'd not by what you are ( as a person ) - but by what you own.
40% of house's are flats/apartaments in citys ( most of them from communist time ) , 50% are rural houses in the countryside ( easter european style , semi-informal build, no-architecture-projects just local builders ). And only 4% can be considerd vilas ( multi story-single-houses ) which are the most opulent living conditions. ( most of them in suburbia , a few inside the citys ). All the buildings are concrete , or modern termo-brick -> so durable materials as houses are inter-generational investements. Apartements & vilas cost around 60k 140k . ( with a median salary of 700 euros per month ) The price of a vila ( in suburbia ) is similar with a price of apartement in city. Cheap land price to invested in more "house" but far from the city vs. normal apartament but close in the city. It as hard to Romanians to own a house as everybody in the known world ( 20 -30 year morgages with the current salarys ) but Romanians are big saver's and are not interested it vacantions , experiences , education - but in having a house. ( they are ok with giving 70% of there income to morgage payment ).
The analysis they did was too superficial. There are so many factors that explain the ownership numbers .
I know a woman who owns (what she said) is a really nice house in Romania, but it sits vacant most of the year because she and her husband rent an apartment in Sausalito, CA. Maybe life is better here in Marin County, so owning a nice house in Romania is not a big deal at all.
Romania has such a huge percentage because of history. Before the communism alot of people lived at villages that resulted in houses gave through generations, and in communism they built alot of blocks and everyone got 1 apartment mostly for free and this resulted in alot of other apartments gave through generations.
Yet, I don't see this as a problem. It's not the home ownership that makes the economy weak, there are alot of other reasons.
Such a poor and biased analysis with a lack of actual number full of loud statements.
It is not even taking into consideration the obvious fact of owning an asset in the end.
Its macroeconomic in perspective not micro
Definitely
A home is a liability
@@ada-boyYou must be reading Rich Dad Poor Dad. Homes can be both assets and liabilities. But at the end of the day, I'd rather own a home because in most cases, one can recoup equity upon the sale.
@ Denis Piliaev - agreed - I had enough of this nonsense after 8 minutes - deeply flawed analysis based on selective data - I could go on but I have better things to do.
This is such a biased and actually false documentary : Switzerland have a low home owners ration yet it’s where people live their best life => low home owners lead to a better life. This is absolutely not true. In most of the Swiss city renting is so expensive that it is very often 3 times more expensive than the interest you pay to the bank when you own your home. And this put many retirees in difficult situation. So I don’t know what this documentary is made for but it is full of partial truths and blatant misinterpretations. So disappointed by the economist
3x more expensive? That doesn't make sense unless there is some sort of renting bubble going on. People are driven by incentives and such a difference would have driven up the price of housing and therefore mortgage interest to make it more competitive with renting. Maybe site some sources.
americans seem very eager to tell falsehoods about Europe, the level of inacuracy is always quite baffeling. They cherry pick one information about one country and try to convince american people that it's the way to go , hiding other relevent informations, limitations and consequences of each model.
There are enough key details missing in the Swiss/British comparison to make it useless:
* the house buyer takes out 2 mortgages, the larger one belongs to the bank, and usually because of a wealth tax, only the low interest is paid back - the house belongs in large part to the lender
*this had already driven the price of houses up by the '60s, so the 386% rise over 50 years looks stable - the franc has risen 10 times compared to the pound over the same period
*There is a fictive rent which an owner pays as a tax, as a counterbalance for renters.
My absolute ultimate life goal is to own a home, this video definitely didn't change my view on this subject.
No matter where you live, owning your home is very important for a stable, happy and peaceful life. It's the ultimate freedom.
Earlier it was just Shell companies, Corporations and Realtor Investment trusts buying up real estate , but now even students and people on work permit have been brain washed by our Realtors and are buying multiple properties and renting them out. Reality is that the middle class has been priced out of Canadian Real Estates as now prices are going crazy in small towns too.
You are wrong, ultimate freedom is when you own a set of skills wherever you are you are an valuable asset. That allows you to go and live wherever you want thats freedom.
House is like any other thing, it can get flooded one day and then you dont own it. And from freedom it becomes prison as in 1 day you just have lost all your assets.
A desire for home ownership is a measure of a successful country / state / city. If everyone wants to rent in a certain area it's usually because they're hoping to leave as soon as possible. Or because prices are insane.
@@HieronimBuszewski we have our own flat but anyway rent in the other city for career reasons and our own one we give for renting. It's no problem. You can move wherever you want too. But we are not young forever, in my country retired salaries are so small that it's impossible to rent a flat for it.
Then you're a fool
"Property speculation has ruined home ownership for the working class." There, I fixed the title for you.
Does the rent v ownership comparison count that owners have an asset at the end?
@Seine O'More I'm aware of that. They didn't indicate that holding the asset, or diminishing payments was factored into the calculation
This is a very hard thing to calculate in general, due to too many variables,
Today's interest rates are historically low, which might make owning more economically sound than renting at the moment.
But at 5% interest on your mortgage with a house around 500k mark (pretty average for a bigger city in Canada):
mortgage interest + property tax + insurance + maintenance costs = rental payments.
Whatever you consider an asset value is payed on top, so renter supposed to have this money in his pocket as well.
Now if renter can invest this extra money at the same return rate as house appreciation, after 20 years both will end up with the same net worth (dow jones index showed the same 300-400% growth since 1970s).
However looking in the future i can't see the housing prices to keep growing at the same rate for the next 50 years.
Disposable income (accounted for inflation) stopped growing in 80s. Housing prices did not. There is no money to keep inflating this bubble forever. It burst in 2008 (with help of loose regulations), it will do it again in the future.
PS: I'm a condo owner, so i'm not talking out of despair. But besides having a primary residence, i'm (being single) also renting out couple bedrooms for extra income. This double function works rather well for me. For an average family though i would not consider a house a must-have.
I even considered buying rental properties in the past, but couldn't come up with a decent enough return model to get into all the hustle, that comes along. Since then i also moved around a bit and realized how much of an anchor a property could become.
In general i don't see rental inferior to owning anymore from any perspective, financial including.
@@nefigushki the problem is that most people who rent in places like London do not have spare disposable income to invest. Many people in the 30s have been paying rent all their life and hold no assets and often not much savings (in a better case, while many have credit card debts). They're unable to pay the deposit to even start the mortgage and just keep paying rent without accumulating any assets .
@@arturturkevych3816, This is unrelated problem. People living paycheck to paycheck, have to do with either country's economic output being to low, or wealth distribution being shifted too much, or both.
Have nothing to do with owning/renting dilemma.
Same people, who can't afford to save while renting, would also be one paycheck away from going bankrupt while having a mortgage.
@@nefigushki With low-interest rates, money is cheap, and everything is expensive. With low-interest rates, you can borrow more and are in competition with people like you that can also borrow more, building competition and inflating the buy prices with little correlation with the actual demand as seen by lower rents increase. If/when interest rates go up, prices will mechanically go down. People say that with low interests it's the perfect time to buy, but taking into consideration the risks and inflated prices, a low-interest environment is the perfect time to sell and diversify. Not to mention illiquidity.
Full disclosure, I've sold my fully-owned property and I am now 100% liquid with well-diversified investments that provide me a total return well above the saved rents and increase in value I used to get.
This video is ridculous.
If you rent , you are still paying for maintenance, the landlord's mortgage and interest. Those costs are just buried in your monthly rent.
Yes but if something like a water heater goes you won’t have to come up with $1000 on the spot.
@@darc1290 Landlord can also write off those $1000 water heater replacement on his rental incomes
Multiple independent analyses have found that renting in Australia is currently economically more sound than buying. There are all kinds of hidden and known costs associated with buying, owning and selling property. Rental prices are not set by landlords but by the market. Currently renting is quite affordable in Australia. Buying is not. House prices are overinflated by investors. And inflation is not high enough to help buyers get rid of their debts fast enough to make it worthwhile.
Of course, but you are not directly involved with actually doing the maintenance.
@@mklives2 That's mainly because housing is massively overvalued in Australia and will come crashing down.
Wow. I expected the Economist to present something actually intelligent.
In many ways I've found this fairly biased, especially when referring to Eastern European countries such as Romania which have a very different historical context in terms of housing..
A clear bias in the Economist's argument. The landlord class would be very happy if working people never own their home. Rent seeking has always been a hallmark of the ruling classes.
Uhh renting and paying a mortgage might end up costing the same but in one scenario you get a house. They totally didn't mention equity when doing that comparison.
You can put the difference in the S&P500 and watch it grow 7-13% YoY.
@@sumranrafiz2220 hmm interesting point
Home ownership is bad if you buy a house you can barely afford with your pay packet. I rent 6 months a year and live abroad in Asia for £200 a month for the other half of the year. Believe me, a mortgage is cancer stress. In the end I have more savings, more freedom than a homeowner
I own a condo but I definitely don't think ownership is for everyone. If you can afford it and plan to live in the area for a long time (at least 5+ years) then I think it makes sense to buy and give up some of the flexibility of renting.
So what? You have more money now...but you'll have to rent for the rest of your life including into retirement. And the need to save up enough to guarantee you'll be able to afford to pay rent until death is just as stressful...or maybe you don't care and then will ask us taxpayers to help you because you made poor financial decisions.
Karl Tanner from Gin Alley I’m retiring somewhere in Asia. Living in UK is more expensive than its worth. I can buy a nice property in Asia for a years wage over here in the UK. Living in the UK is miserable and full of miserable people. Leave your box mindset
@@Flowerlifts111 where are you allowed to buy property if ur British
@@Daddyiscool450 same... Even I wish to know
As a 68 year old in Australia I am very happy to be in my own home. I always wanted to have “a roof over my head” when I am old. Four of my sisters do not own homes so one lives under my house, one in a tiny caravan, and two rent. It’s very difficult for them but they all had opportunity to buy in their middle age but spent windfalls instead. Of course I will continue to help, but I say, plan for your old age.
I live in Australia in the house that my husband has owned since Dec 1994. As the main breadwinner he has gone through periods of unemployment. As he had the mortgage already long paid off by the time we married eighteen years ago he was not the least bit concerned. Certainly not concerned enough to move the family away from my part time job, our daughters school, my mother, our friends, and our support networks. So no matter what home ownership might do to an economy, it would seem to be in the best interests of individual families. We sure ain't rushing to sell to join the renters. No thanks.
Respect for your compassion, with your siblings. And the late you will own nothing and be happy song just went down the toilet 😅🤣😚
Where are your children
Under your house? Like a Mole?
Pretty weak take from the Economist. I support renting but all the arguments for it in your video were weak
Agree - this was a very disappointing assessment, would have expected better from the economist
What would be the right arguments?
Didnt mention how renting long term needs to include building up investments for retirement, so as to make up for not owning a property.
@@iPondR if you are able to save money rather than spending it on rent.
@@iPondR that's true, although I think that was the only downside to the video, namely not mentioning the ill effects of renting long term
This a slick way to reintroduce a contemporary type of feudalism
Not really, because feudalism was a completely different economic system. Even if 100% of people rented homes in the US, there's still capital ownership by a few, not a tiered system of where you worked.
@@Montfortracing Ehh the end result is the same, i.e all land owned by an elite upper class which definitely wouldn't have to work, and like every monopoly/duopoly/oligarchy they definitely can dictate the terms (especially if you espouse the neo'liberal' ideal that governments should remove themselves entirely from citizens 'economic liberty'), meaning it IS exactly "a tiered system of 'where' (or perhaps 'if') you worked"... Except, no wait, its not the same because in feudal society the nobility atleast in theory had an obligation to protect their peasants..
@LagiNaLangAko23 "Even serfs had their "own" homes that they can build as they like". I'm afraid you are unaware of medieval European serfdom. Many were renters of their feudal lord, who owned the land and estate. Neither could they build "as they like".
With modern renter protections in many places, it's nothing like "serfdom". Your idea of it as such a thing is really mainly emotional.
@@Montfortracing - For many Capitalism is simply a more sophisticated for of feudalism. It is based on the same underlying philosophy - ownership of the essentials in life by the few who can then hold everyone else to ransom for their needs.
Total BS. Still waiting for somebody to say "I wish I didn't own my house/apartment"
yes. i have properties in Phuket and KualaLumpur. poor return if any
@@p.a.ch.3861 they are not _your house_, apparently, just a form of investment.
I saved more when I rented. A home can be a money and property tax pit that makes it harder to move for career advancement.
@@joyaustin6581 The question is, why is it this way? Who has decided that taxation should make home ownership inaccessible even for _career_ workers?
@@olgakuminova homeownership is financial liability. You don’t see the tax portion when you are paying rent. It could be taxes that is increasing the price of rent not a greedy landlord. Remember nightmares are still dreams. When you can’t afford a down payment do you really think some one would be able to afford a new roof, new ac unit or furnace, it drives the economy because plumbers, electricians, carpenters, tree trimmers, lawn service, and handymen are expensive when things go wrong. Don’t have foundation issues, HOA concessions, roof leak, pest problem, flooding basement, fence fall or deck rot. Then you have to take time off work to make sure it’s done properly. I pay 3500 year in taxes and insurance alone. It would be higher if you added mortgage insurance and private mortgage insurance. My rent was closer to $700 a month and most rentals came with a pool, yard and gym I didn’t have to maintain. On paper my home has gone up value but when I sell there are taxes on profit on top of realtors taking 6% of the profits. I enjoy more space, painting walls without permission and no pet restrictions but it’s still overhyped based on my experience.
A lot of people don't take into account all the additional expenses that come along with home ownership: maintenance, insurance, taxes, HOA fees, etc. For most people buying a SFH, they can expect to pay an additional $1,000 a month to service these additional expenses.
I, like most 1st time home buyers, had no idea about all the additional expenses on top of P.I.T.I. I'm sure the millennial buyers of the last 2 years are feeling some serious buyers remorse at this point.
This doesn't even take into account things like replacing a roof after a big storm or a leaking pipe causing a black mold problem inside the walls (that latter happened to me!).
Home ownership should be approached mentally like preparing to have a baby. It's a big, hairy, long-term commitment that's going to cost you a ton of money. It can be worthwhile and rewarding, if you can afford it, but if you can't, your life is going to be a constant struggle.
My husband and I live in Japan and we rent. Some of our friends were already able to buy homes here. But Japanese houses are a bit different from other countries because instead of increasing in value overtime, it does the opposite. And because land here is expensive, almost all the new houses here look like cubes with very minimal space. ☹️ We’re thinking of just getting a simple house built in our country(Philippines) and put the rest of our finances to savings and investment instead.
I and my wife decided to live in her parents house when we married. So instead of buying new house, we simply need to renovate the existing one. Lots of money saved. It's considered acceptable to live with your parents even after marriage in my society
I am a home owner because my house payment is lower than rent for the same size house or apartment.
And there's nothing wrong with that. As the video said, it's basically 50/50, and heavily dependent on local and personal circumstances.
@@mikeb1371 Fully agree - people should be thinking like that. You're always going to pay. The question is do you want more flexibility or security? And both of those things have upsides and downsides.
Its the opposite where I live. I can rent a house here in LA county that would be a million dollar home that's too much for me to buy. Nonetheless I wud still like to buy If n when the prices aren't so effing high. Highest I've ever seen here lately. Foreign investors drive the costs up too and don't even live in the home.. among other factors.
@@mikeb1371 In many currencies of the world you cannot fix the rates for any period of time. Next argument? Move to America?
as much as I understand this concept.. can't help but want to own a home; it's been engrained into me
That is perfectly fine. The problem is not that people are allowed to own homes if they choose. The problem is government subsidies for homeownership over renting and restrictions on building more housing that raise the value of existing homes, benefiting established homeowners and hurting everyone else.
And basing an entire economy off of home sales and values and interest rates is absurd.
CANADA
A huge part of the world wide economic growth is only on paper due to ever increasing property prices.
In time like this where global economy collapse during the pandemy I am grateful I owned a house.
After owning a couple houses over the last 35 years, you learn that the ‘rent vs. buy’ decision involves many factors. One of the most important is how stable your situation is and how long you plan to live in that house.
From a purely financial viewpoint, one has should consider the ‘total cost of ownership’. Those costs are much more than just a mortgage payment. As a friend once said, ‘A house is a money pit.’ I live in Houston, Texas. Most houses in Houston will eventually have foundation damage. That bill may well cost you $20K. A roof lasts about 15 years. There’s another $10K. Periodically, the air conditioner craps out and that will put you back several thousand dollars. Paying to have the grass cut will cost $1,000 per year. Heck, if you happen to sell a house it will cost 6% of the sales cost. If your house costs $300K, that’s means you lose $18K of your equity. Even after paying off the mortgage, you will need to pay $500/month for real estate taxes. Remember all that extra money could have been put into the market and earning 5-6% per year to counterbalance house equity built up over the years. So, it’s not as simple as wife’s tales like, ‘you are throwing away your money on rent’. The only way to make a decent ‘rent vs. buy’ decision is to open up a spreadsheet and ‘run the numbers’ over a very long period of time. In doing so, you may well make a better decision.
However, there’s little doubt that owning a house has many positives which we are all familiar with.
I've been paying rent for 51 years.I don't advise it.
One advantage is if you want to start a business. If you need to borrow money, and most businesses do to start or expand, a bank will want something solid as collateral. They won't be interested in the business, as they fail all the time, so if you're renting your appointment at the bank is going to be a short one.
Great points! I agree about running the numbers on spreadsheet or online calculator and do a modeling exercise.
I pay 230€ a year property tax. So it depends where you live i guess. Home ownership is a no-brainer over here.
@@deaddoll1361 That is an interesting situation to consider, but it fails to recognize a key insight that many other comments have failed to realize. When you rent, you will have the ability to invest in other sources, while when you buy, you're essentially locking yourself-in on investing in the housing market. So if you were to start a business, you would have other assets as a replacement for housing which could be used for collateral.
10:15 “renting and buying property could cost the same amount over the long run” .. yes but after 20 years of renting you will have 0% of spent money converted into assets, while if you bought a house 60-80% (depending on various additional fees) of spent money actually becoming your asset.
The only case when you would not want to buy is when property market is declining and rents are super cheap. Which for top economies happened only during credit crunch for 3-5 years. After that the real estate price growth has eliminated pretty much all loses.
So why do landlords have a house to rent in the first place?🤔
This video is obviously sponsored by the bourgeoisie
Long term returns
they. buy. in. cash.
They can diversify and have a lower cost of capital
Real assets are key to a truly diversified portfolio.
Never let anyone rule your choice. If you want a house, get it. First they tell you that and than this
All this has changed in covid 19
Own a house and work remotely..no need to move anywhere
I think you should not have taken Switzerland for comparison. This is a very special place for home ownership and you only scratched the surface:
-30% of the population is foreigners, they might not be interested in staying here for ever.
-the house is never really yours. There is a strange relation between banks and government where people extend mortgages for ever to have tax deductions.
-you need to have 25% of the house price in cash.
-small country. House ownership is only possible on the country side and many people prefer the city.
- etc , etc
When we are comparing costs of ownership vs renting, shouldn’t we also consider that ownership is more like an investment where you have acquired an asset by the end of it whereas in renting you’re left with nothing in hand.
Ha! I thought the crash of 2008 had dissipated the myth of homeownership as an investment and the people had finally learned their lesson. I guess not! Home is just the place that you live in, it's not an investment.
Absolutely. That is correct.
AC what you said makes no sense, property appreciates in value. Rent is like throwing your money in the toilet
AC 2008 was about speculators. Mortgage increases the owner’s equity, while renting does landlords’.
vickymercury1 depends if you invest the money you save by renting you often have similar amounts of capital as the homeowner in the long term
here is a tip how to get rich: whatever economist says, do it opposite
😂🤗
So true.
Absolutely spot on.
Has it worked for you?
American voters did that in 2016! And a record number did that again.
This video was not done well. Switzerland works because according to the woman, she can rent for 20 years without prices going up? That is an extreme form of rent-control something often derided by economists. If that is the case then what Switzerland does is essentially ports over the benefits of home-ownership into renting. They basically are making a case for home ownership.
Exactly. I rented in S. Florida a few years back and they painted the outside of the building and raised the rent $100/month.
Exactly, Speaking for USA. We have limited protection for renters compared to other countries: rental agreement, eviction and protection from Foreign buyers. In Texas, I personally witnessed a landlord remove main entry door to apartments to get a 5 day late rental payment. In California, you can expect a 25-40% rent increase after the landlord does renovations. New York, Miami etc. are like London. They are places for international money laundering--walk around and you will see 40-60% of high end apartments sitting vacant.
@@stephd3002 Palm Beach Island, FL (mar-a-lago, trump, the Kennedys, etc) only has a 30% occupancy rate. Source: tour boat guide ~2014
Yes and comparing Switzerland to Romania? Not exactly similar economic opportunities over the last 50 years. Iron curtain and tax haven neutrality or what.
The only reason that I could own my own house is because my parents owned their own house, which when they passed I sold. Imagine if they had rented.
Plus, and more importantly, my mortgage is 25% les than the price of renting a house.
Glad you could money off your loved ones. So touching.
The best decision ever people will do In their lives is buying a home .
And yeah it's not fair only the rich ppl can get everything .
Honestly it’s not though rented all my life made smart investments and retired aged 52. If I brought a house no way could I afford these investments. Still rent to this day and thankfully made a lot of money
Lack of supply is the problem not ownership.Who will own the properties? Renting promotes landlord elites and rising inequality.
Yes true. In such kind of system , while some will become financially free, others will have to work whole through their life to afford a shelter.
Renting and owning a home can go hand in hand. A high ownership percentage in a country doesn't stop mobilisation of people. Suppose there are two guys John & Harry who own homes in two different cities. John can move to Harry's home city and harry can move to john's home city.. Both rent their respective homes to each other. Rent to be paid will be nullified by the rent received. This is how home ownership is better than renting homes. Many of the facts stated in the documentary are flawed.
To me, the most hated part about the concept of homeownership is the cultural expectation surrounding it.
that's because you and everyone else have the expectation to retire.
It's even worse in China where it helped fuel the ghost city boom
@@8platypus that's not the expectation she's talking about. She's more concerned with the money making aspect of home ownership than primarily seeing home ownership as finding a place to live.
@@Montfortracing "Equity" is how you make money, why didn't she mention that? Where as the money used for rent is not retained.
@@8platypus yes I know! Again, the problem becomes, as I mentioned, when equity is the primary reason for home ownership and not the place to live itself
Renting must be the most efficient way of taking wealth from the poorest and giving it to the wealthy or better off (buy me a house poor person) should be the landlords slogan lol
Renting is stinkin' thinkin'...I refuse to contribute to somebody else's wealth at the expense of my own.
Amen, brother. I don't work with toxic people.
isn't that the same as having a job?
But in ownership you contribute to somebody elses wealth too. The banks. Mortgage is killer so much interest.
@@jimminycricket3384 I disagree. I rented through most of my twenties and early thirties and mostly every year my landlord would raise MY RENT in order to cover HIS MORTGAGE and property taxes. I paid my house off early and refinanced for a lower interest. Nope you're wrong!
@@grizzlegreezz9696 unless you could eat air or sponge off of somebody no choice, but with renting or buying, you have a choice
The argument is wrongly presented. We are earning in currencies that have no intrinsic value and with no guarantee of future value. They do not have fixed exchange rates with any commodity, thus what I earn at young age and save will almost guaranteed depreciate a lot by the time I need it the most (old age), that is the buying power will be lost over time. To protect that saving from evaporating under the erosion of inflation, I have to take a second job and invest for a return of at lest 5% per year to offset the economic downturns (like that in 2008). If you're asking all people to do only that (save currency), imagine the waste of time and opportunity
The safest and least time consuming bet for saving is in hard assets. Owning your home is by far the safest way to safe for old age
You mentioned Romania in the Documentary. I grew up in that country and experienced the period with high inflation rate shortly after the 1989 Revolution. A thing stuck on my mind since then. The value of any currency can evaporate. My grandfather's lifetime savings evaporated in a matter of 1 year. In 1990, his savings could buy a one bedroom apartment in the city, or 700g of gold. One year later, the amount could buy a frozen chicken in the superstore. Only the apartment of my long gone grandparents are still owned in the family
Thats why you should never have all your savings in one currency. Diversfy your investments and savings!
@@Churros1616 So you suggest that he invests his money in another currency that also depreciates due to inflation instead of in assets that will grow in value?
Your argument is assuming that the money you save from renting is not put to work. If you are disciplined and invest what you save from renting in a stock and bond portfolio, you will come out ahead and be able to fund your retirement.
Same thing in Yugoslavia. Today Croatia, we save in realestate. Property tax is almost nothing. We also went through high inflation. This stick in nations mind. I dont think other countries realize this as we do. Just imagine that high inflation and beeing in a renters position. Lol.
buy stocks instead. they actually increase the value of the economy. homes just sit there.
The price of housing is determined by the level of access to credit. Banks create housing bubbles.
Debt creates 'new money' in system, in saying that, debt equals slavery
Credit creates bubbles, not banks. Banks are bound by law and your ability to repay. They do try to mitigate the risks, but people who act like they get high on debt will inflate the bubble.
There's also employment opportunity too.
Minimum wage normally doesn't cover it.
Anything besides this will have massive competition.
And hostile work environments, make it difficult for people to hold-down a job. Regardless of what it is.
@@sblijheid Agree. Banks or any investment can create more than just housing bubbles. So maybe the problem isn't banks but how they are regulated and obey the law. Proportion of capital to lending ratio and rules on affordability of debt can be used to stabilise the market. These should apply to both the borrower and the lender equally. I find looking at unregulated loan markets or one sided loan markets such indentured labour or mafia/gangster lending rackets so see why these controls are put in place.
@@kiwiradioNZ - New money = phoney money.
When I saw the title, I thought there is some wisdoms that I didn't know. Well , I still don't regret buying instead of renting
I just came across this Economist video and i want to say that in all countries owning a house is important, irrespective if it is rich or poor country. It is not just an obsession.
It's debt what makes home ownership expensive and risky.
Also, someone must own so you can rent, it might as well be me who owns.
Oh dear.🤦♂️
You need to put a little more thought into your analysis. Why not own a company instead of a house? Each year a company will product more products, whereas a house just sits there rotting away.
@@Dayvit78
because it is impossible that the vast majority of the people have a company that does not go bankrupt.
@@Dayvit78 Because you need to live somewhere anyway.
I love the smell of propaganda, any time of the day
great comment 😂
The critical piece of information missing: Swiss have a mandatory 25% investment into a government backed pension scheme. That's why the majority of Swiss are millionaires at retirement. It IS cheaper to rent and INVEST the difference. But that isn't happening in the UK and US. Homes are forced savings for so many. The BEST thing to do in the US is to buy as quickly as possible, but a much SMALLER home or even a condo that you can technically "afford". Mortgage no more than 25% of your take home pay on a 15 year fixed income.
Sounds ideal