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Delia Lloyd Headshot

Renting Or Buying: Which Is More Grown Up?

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We're about to move.

We just got notice from our landlord that we have 60 days to vacate our home. And among the many things we've had to contemplate on short notice is whether or not we want to continue to rent or go ahead and buy.

I'll cut to the chase and reveal that it looks like we're going to be renting our next flat (which -- in an act I can only attribute to God or Karma or both -- we may have miraculously already found, the very day that we got kicked out!) But for a brief moment over the weekend, 48 hours or so, we thought seriously about buying.

I've written before about how I find safety in movement. For me, buying a house falls into a long list of things -- jobs, careers, continents -- which make me feel trapped, and from which I instinctively flee.

So I was heartened when renowned Yale economist Robert Shiller gave me an out from forcing myself to confront my commitment-phobia in a column that he wrote for the New York Times last week. Shiller points out that the United States government has been subsidizing home ownership for decades. And it has done so largely for cultural reasons: for many Americans, owning a home is intimately bound up with our notions of citizenship. Home ownership is the very embodiment of individual liberty, whereas renting has been linked (culturally) with the oppression of the landlord.

Shiller wants to suggest that this American attachment to owning a home needs to end. Financial theory tells us that people should diversify their assets, rather than dumping them all in one place (a home). And by encouraging people to take a leveraged position in the real estate market at all costs, mortgage institutions have encouraged this culturally rational, but economically irrational, practice. And we all know where that got us. (Thank you, sub-prime mortgage crisis.) (For an interesting perspective that argues the exact opposite, see this article in Forbes.)

Shiller's bottom line, then, is that we should re-think the idea of renting because it might make more sense for the majority of Americans. He gives Switzerland as an example of a country that has re-jiggered its housing finance institutions in the direction of rentals without sacrificing national pride.

Shiller isn't framing it this way, but another way to put what he's saying is that in the present economic climate, it may actually be more grown-up to rent, rather than to buy. Which is the exact opposite of how we normally think about this issue.

To which I say: Amen. When can I sign the lease?

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