There are further aspects that speaks against home ownership:
a) The money one puts into a house is an investment whose future value depends on the increase or decrease in the value of the property. If a person puts most of her or his money into this investment, this means per se a high risk, because the person's investments are not well-diversified.
b) People run the risk of overspending early in their life, because many of them want to build or buy a house for life, which means building something larger than they would rent at that age, thus generally spending more money on housing (via interest rates).
c) When people have no heirs or their heirs are already well provided for, it makes little sense to own a more or less mortgage-free house when they die. The money could have been spent during their lifetime.
These aspects speak, of course, not absolutely against home ownership. Point (a) cannot easily be avoided, when the property's value is high compared to one's savings and income. But it also means a commitment to saving, which can be a good thing. Point (b) can be mitigated by starting with a small property, selling it later and then buying or building a larger property. Point (c) can be mitigated by a mortgage on the house, if this is possible, or by another financial instrument where the house is (partially) sold but one retains a right to live there until death. -- All in all, however, the danger of overspending is real.
>Point (c) can be mitigated by a mortgage on the house, if this is possible, or by another financial instrument where the house is (partially) sold but one retains a right to live there until death.
In Italy (but probably in many EU countries) there is a way to sell what is called "bare property" (in Italian "nuda proprietà"), while keeping use of the house (in Italian "usufrutto").
The cost of a "nuda proprietà" is of course much lower than the full one, and basically the buyer is betting on the time the seller will still live, whilst the seller is using the sale income to live those remaining years.
It is not particularly common, sometimes the buyer (of course not really poor people) use this form to buy a house for their sons as a form of investment for when they grow up.
a) The money one puts into a house is an investment whose future value depends on the increase or decrease in the value of the property. If a person puts most of her or his money into this investment, this means per se a high risk, because the person's investments are not well-diversified.
b) People run the risk of overspending early in their life, because many of them want to build or buy a house for life, which means building something larger than they would rent at that age, thus generally spending more money on housing (via interest rates).
c) When people have no heirs or their heirs are already well provided for, it makes little sense to own a more or less mortgage-free house when they die. The money could have been spent during their lifetime.
These aspects speak, of course, not absolutely against home ownership. Point (a) cannot easily be avoided, when the property's value is high compared to one's savings and income. But it also means a commitment to saving, which can be a good thing. Point (b) can be mitigated by starting with a small property, selling it later and then buying or building a larger property. Point (c) can be mitigated by a mortgage on the house, if this is possible, or by another financial instrument where the house is (partially) sold but one retains a right to live there until death. -- All in all, however, the danger of overspending is real.