Robert Shiller Isn’t Saying NOT To Buy A Home

This link has been floating around the internet for a couple of days, and I want to respond.

As I wrote on someone’s Facebook wall, I have no problem with the article at all – I don’t own a home (that I live in, anyway) either, and my income centers around people buying and selling homes so it’s important to me that people continue doing that. Shiller is VERY highly regarded in real estate circles, and his economic reports are the gold standard. But the title of the article is misleading – Shiller doesn’t say it’s a bad idea to own a home, he says that if you are looking at home ownership as an investment vehicle *that’s* where you’re making your mistake. Renters can diversify their portfolio by taking their monthly surplus and putting it into other savings products, but the truth is that far too often they don’t. By paying on the mortgage month-by-month thus decreasing the principal balance, homeowners are forced to save. In theory a healthy market ( >0.01% appreciation/year) will take the value of the home in the opposite direction, thereby creating a savings vehicle for the homeowner. That’s why homeowners are, traditionally, in a stronger financial position than renters.

Is renting right for some? Absolutely. Right now, it is for me! Is owning a home right for others? Without a doubt. And circumstances in our lives will dictate what we should be doing in that moment in time. Don’t feel pressured to buy a house because all your friends are doing it, or because family says you should, or even because – OH NO – a real estate agent says it’s a good time to buy. Buy a house because you can afford to, because you’re in a good place, and because you want to establish roots in a community. #LiveWhereYouLove.

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