You don’t actually want to buy a house
The American dream... or just good marketing?
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As soon as I began writing publicly about housing policy, people began to ask me for real estate advice. Should I refinance my mortgage? Is it a good time to buy a condo in Northeast D.C.? Am I too young to buy a house?
I have always emphasized that I am not in the business of giving personal financial advice. But I do, unsurprisingly, have a few strongly held views.
To put it glibly, I’m anti-homeownership.
To put it slightly less glibly, I think that the bipartisan cult of homeownership — a cult that urges people to go all in on one immovable, nondiversified asset in hopes that they will be able to sell it at just the right moment to finance their retirement — is extremely irresponsible.
If you want to buy a house as a matter of consumption, have at it. If I were wealthy, I would definitely find it fun to outfit a house to my exacting, idiosyncratic preferences. But so many people are invested in convincing you that it is always the correct financial decision to buy rather than rent.
David Bach, author of The Automatic Millionaire, an incredibly popular personal finance book that achieved global reach after being launched on The Oprah Winfrey Show in 2004, argued that “the most important advice I can tell you right now if you’re young is: Don’t listen to these people that tell you should [sic] rent versus buy .”
Perhaps the media’s most popular financial-advice personality is Dave Ramsey, who treats the choice to rent as a temporary state for people who are either in debt or haven’t saved up enough for a down payment.
In politics, then-President George W. Bush proclaimed that “we want everybody in America to own their own home.”
But I’m not buying it.
I probably don’t have to quote all these people because you, like me, have probably been at the receiving end of familial and public pressure to become a homeowner. And while a home is a legitimate consumption choice and sometimes a good investment, let me reiterate: It is an irresponsible public message to treat a leveraged, nondiversified, illiquid asset as the universally correct foundation for personal financial security.
My skepticism toward the cult of homeownership stems from two beliefs:
First, the best personal financial advice is to diversify your assets. And not only is a home a single asset, it is also tied closely to your employment prospects. If, for instance, there’s a local labor market shock — like the president of the United States empowering the world’s richest man to illegally fire employees of your region’s largest employer — that blow to your job opportunities is going to correlate with home prices in your area also going down.
As a result, instead of an asset that’s there for you when other things are going poorly, a home is an asset that is likely to perform poorly exactly when you need it not to.
Second is the belief is that people severely underrate the benefits of mobility in maintaining financial security. Owning a home makes it much harder to leave your region if you need to. When you lose your job — or just want a new one — homeownership acts as a drag. Two economists argued in a 2024 paper that it contributes to “lower migration to better job markets.”
The cult of homeownership can have disastrous policy consequences. If politicians believe that promoting homeownership is an overriding concern, they do things like sell houses in floodplains to low-income, low-income homebuyers.
When pressed about this practice during the Biden administration, a Department of Housing and Urban Development spokesperson argued that “locking low-income homebuyers out of a great number of affordable homeownership opportunities because the homes are located in communities within flood zones not only runs contrary to the Administration’s objectives of achieving greater equity in homeownership, but prohibiting sales based on income would be comparable to sanctioning a resurgence of redlining.”
You heard that right: It is redlining not to sell a home to a first-time homebuyer in a floodplain.
Matt, who owns not one but two homes, is much less convinced of my anti-homeownership agenda. While he agrees that homes aren’t fantastic investments — and that in an ideal world, we would change a lot about American homeownership policy — he thinks that the way homeownership forces savings is reason enough to recommend it to people in general. (Allow me to reiterate that none of this is personal financial advice.)
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Show notes:
“‘Giving Up’: The Impact of Decreasing Housing Affordability on Consumption, Work Effort, and Investment,” article by Seung Hyeong Lee and Younggeun Yoo showing that people who see homeownership as out of reach spend more and save less: SSRN page
“All Debates Are Bravery Debates,” article by Scott Alexander referenced by Matt: LessWrong article
“The Homeownership Society Was a Mistake,” article by Jerusalem that interviewed Zillow economists about home equity loans: The Atlantic article
“The Federal Government Sells Flood-Prone Homes To Often Unsuspecting Buyers, NPR Finds,” reporting referenced by Jerusalem: NPR article
Vanguard investing accounts, not the sponsor of this podcast: Vanguard.com
“What Percentage of Americans Have a Retirement Savings Account?” 2025 polling that showed 59% of U.S. adults had a 401(k) or similar retirement plan, either alone or with a spouse: Gallup poll
“Insurance Against Rent Increases,” paper by Han-Suck Song exploring a design for rent insurance to protect against dramatic rent hikes: European Real Estate Society article
Peer Review: “Fortunate Families? The Effects of Wealth on Marriage and Fertility,” article by David Cesarini, Erik Lindqvist, Robert Östling, and Anastasia Terskaya: NBER working paper
The Two-Parent Privilege: How Americans Stopped Getting Married and Started Falling Behind, book by Melissa S. Kearney about the economic consequences of decreasing marriage rates: Goodreads page, Amazon page
Get Married: Why Americans Must Defy the Elites, Forge Strong Families, and Save Civilization, book by Brad Wilcox alleging that the ruling class discourages marriage despite its benefits: Goodreads page, Amazon page
Jake Kozloski tweet about couples sorting on intelligence: Tweet
Bowling Alone: The Collapse and Revival of American Community, book by Robert D. Putnam that will be the subject of an upcoming episode: Goodreads page, Amazon page
I love y'all's debates!!
Jerusalem's response to Matt's point about the advantage of being able to buy with leverage not available to ordinary people outside of mortgages seems like it was misunderstood by Jerusalem. You kept going back to HELOCs, but the point is the financial upside is significantly magnified when you can invest a loan.
I'd suggest in the future maybe pausing the conversation to align on the mechanic being discussed or perhaps going deeper on it (since perhaps listeners may also not understand it).
In this case, I think the advantage of leverage is extremely critical and perhaps the most important, so breezing past it by discussing HELOCs seemed like a missed opportunity.
FWIW I generally agree more with Jerusalem here. I'm sharing the above with the hope of bolstering our shared position!