Re:The High Cost of a Home Is Turning American Millennials i...
by ouid on Monday February 06, 2017 @04:15PM
(#13584059)
The income tax credit means that people largely buy the most expensive home they can get. This has a very serious effect on the market value of real estate, and means that the cost of housing increases non-linearly with the number of people in the middle income bracket. Those extreme housing cost increases are result of the tax credit, and an increase in the number of people able to take advantage of it.
Were unemployment to rise, the price of real estate would similarly drop non-linearly. The price of your house is extremely volatile, don't let anyone convince you otherwise.
When you buy a mortgage in the US, the payment and interest is fixed. Even taxes are, occasionally, protected from market inflation. When you rent a home, you have absolutely none of those protections. Rental costs go up, nearly every year, for the rest of time immortal.
Even if there is no tax benefit to home ownership, I would always choose ownership, because it's the only way to protect myself against extreme housing cost increases. (And before someone says "that's just NYC and SF, live somewhere cheaper" I'm already in small-town Midwest US, even here 10-15% yearly rent increases are common).