12/04/2023
Great Explanation by Brady Mullen about an article that misses the mark from the NY Times.
Here's another example of why institutions struggle with public trust. They keep shooting themselves in the foot.
This NYT article is a good example of taking a hot topic and capitalizing on it by having someone write about it who clearly does not understand the topic at hand.
The article is about renting vs owning, and there is a fundamental error that not only misleads readers, but causes the wealthy to get wealthier at the expense of those who don't know better.
I left a very comfortable 18-year career in finance to work in real estate because I felt I had something to offer. I'm not parroting real estate slogans.
I began working in the real estate industry as my children were becoming adults, and I realized the MOST CRUCIAL financial decisions they will ever make are about the REAL ESTATE in their lives!
🔥 🔥 THE BIG MISTAKE 🔥 🔥
The NYT (and MANY other people) are analyzing the housing market like they'd analyze the stock market. This is SO WRONG.
This can have some utility if you're deciding whether or not to INVEST in real estate, but that is not the point of this article.
This article is talking about having a roof over your head. Here is the difference between analyzing housing vs the stock market: You MUST pay for housing, or you will live outdoors. The question is whether you're buying that home for yourself or for your landlord.
Try this little thought experiment - what if you HAD to have stocks in your possession at the end of any given day or you'd sleep on the sidewalk? You'd have two options, you could purchase the stocks, or you could borrow them from someone who has more than they need for a fee (RENT). Of course, there's no such market for this because you don't really NEED stocks, but that's the point, so hear me out.
In a pinch, renting them could make sense - sleeping on the sidewalk is a pretty lousy option.
But it would NEVER be a reasonable solution to the larger problem! You'd figure out a way to buy what you needed to guarantee you didn't have to give a third of your income away each month to avoid sleeping on the sidewalk.
We often seem to get the QUESTION wrong. The question isn't, "Is it a good time to buy a home?" The question should be, "Is it a good time to give a third of your income to a landlord so I can sleep indoors?" That seems like a much easier question to answer: NO!
Clearly, there are times in our lives where renting can make sense, but it should almost always be based on the temporariness of the situation. If you think you will be moving in less than 2-3 years, then renting could make sense.
But because you think renting is better for your wealth? That is insanity.
And this pervasive idea will put money in the pockets of already wealthy investors at the expense of the scared and uninformed.
Posting the NYT article below:
We explain the state of the housing market.
