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James Lileks is back in the house, ladies and gentlemen! And speaking of houses, Jack Ryan joins the podcast to explain his war against the National Association of Realtors. (Pre-order your copy of the book he’s co-authored: Bringing Adam Smith into the American Home: A Case Against Home Ownership.) Yes, you read that title correctly. Along with his fight against the “real estate cartel,” Jack has his doubts that home ownership is the right move for all Americans.
Plus, the reunited Ricochet boys recall how the O.J. Simpson trial changed America, and they fight fire alarms and wrangle with manly chores.
Audio from this week’s open: A flashback to the 1995 OJ Simpson trial with comedian Norm Macdonald and defense attorney Johnnie Cochran
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This Jack Ryan?
Stanley Kurtz is really good at explaining how the Democrats want to zone the suburbs from the federal level to affect politics and sociology or whatever you want to call it. It’s outrageous.
See this review of his book Spreading the Wealth: How Obama is Robbing the Suburbs to Pay for the Cities
Realtors are an evil cartel.
My advice on smoke detectors, buy those special 9V batteries that last 10 years. If you are hesitant to spend that extra $4 bucks, ask yourself if how you feel about that extra $4 at 3am, when you need to be sleeping.
Simple image form, for easy sharing without going to Twitter: (note that the above image links to Twitter, not X)
Boy, James was tough on Ryan. ( and I’m glad he was)
Clever title.
It’s like the hosts said at the end: EJHill is Ricochet’s unsung hero.
I should have quoted the post. Didn’t start out saying, “Yes, that Jack Ryan.”?
It’s the Sum of All Real Estate Fears.
I agree completely. The great thing about Ricochet is that I think 87% of us get it.
I enjoyed the interview! Great guy.
It’s too bad Rob missed most of this conversation, I would have enjoyed hearing more about how he made the decision to rent when he moved to NYC.
FWIW, my wife and I almost bought a home in San Francisco in 2021 and are glad we didn’t. The economy at the time felt pretty wobbly and having that much equity tied up in a primary residence seemed way too risky. We are happily renting a very nice condo and enjoy the freedom that it gives us. (Some of that admittedly is due to the issues SF is having, which is a longer topic for another time.)
We will probably buy a place at some point but we feel no urgency. Jack Ryan’s description of a “buy vs lease” decision is exactly right.
Anyway, great discussion, thanks to James and the team for hosting it.
I do love it when James gets in on the question asking.
I haven’t listened yet, but I think it’s a mistake to put financial factors over other concerns. Leasing/renting to “save money” might sound good, as long as you have your good income. If that stops, or is significantly degraded, you may have some very large problems.
Not that a 30- or 40-year mortgage doesn’t allow for those problems too, which is why I’ve bought and paid off my places within 6 or at most 9 years.
Of course that’s easier when you live someplace where you can get something for $60k or $90k, rather than $600k or $900k. But a lot of that can be choice, too. The first place I bought/owned was a 1959 mobile home in a park, around 1995 I think. That cost me around $4,000 as I recall, plus space rent was just $100/month. Some years later I was able to SELL that – something you can never do with a rental – and start moving up.
Yeah, I agree with all of this. There were a lot of considerations that I glossed over in my first comment.
In our case, the decision was less about short-term cash flow than about diversification of risk. San Francisco in 2021 felt really unstable and overheated, and I wasn’t at all confident any place we bought would hold its value, much less gain value, if we wanted to sell after 5-10 years. In the short term I’ve been proven right — the last time I checked, the place we ended up renting had lost ~20% of its value since 2021, which would have been our entire down payment if we’d bought it. In the longer term, who knows.
There are a lot of other factors that make us unusual, and SF is a really weird market, so I try to avoid generalizing based on our experience. I don’t even know if we made the right call! But I do think it’s useful to look at property as a (usually) heavily leveraged investment and consider the tradeoffs, opportunity costs, drivers of value, etc. that come with it.
I figure that unless prices – and hence down payments, unless you can get VA or something to allow 100% financing – are really outrageous, and since you HAVE TO live SOMEWHERE, it rarely if ever makes sense to rent rather than buy.
The last few places I’ve bought, my mortgage payments were actually significantly less than others nearby were paying for rent for condos/townhomes in the same complex that weren’t as nice as mine. So even if something disastrous happened and I had to leave without being able to sell or something, I still had been paying less than renters over the time I was there. And that is also saving money.
Good interview. There are a couple of pieces of mainstream advice that have been handed down for generations that are not as universally true as some people think. One is that you must go to college if you ever hope to amount to anything. Another is that you must own your own home, or you are a sucker. Depending on a variety of factors, owning might be best for you or renting might be best. Some people believe in this advice so stridently that they look down on renters the way some people look down on people without a college degree, even if that “uneducated” person is doing very well.
The idiot central planners just don’t care enough. Now almost everybody’s going to pay one way or another.
Personally, I’m sympathetic to kids that get duped into going to college. Nobody’s giving them good advice. If the price was what it was in 1980 it wouldn’t be a big deal but that’s not where we are. It’s also a totally different economy.
Before 1980, you could develop your human at a fair price. Not anymore. Shelter used to be fairly priced before 2000 or something. These people are idiots. Inflation is stupid.
All of this government force, and nobody knows what they are doing.
Government Is How We Steal From Each Other™
The Ludwig von Mises Institute Is Right About Everything™
If nothing else, the idea of going into retirement while still paying ever-increasing rent should be enough to settle the matter.
And even if that wasn’t a big problem 30-40-50 years ago, it’s a different world.
Blue State vs. Red State? A renter may escape more easily.
For sure, I wouldn’t want to be either a renter OR an owner in a blue state. Which is a big part of why I left Oregon, over 30 years ago now. But some idea that an owner in a blue state would somehow be required to stay put, isn’t right.
Someone who owns in a blue state and then ends up “fleeing” due to government corruption or whatever, is no WORSE off than someone who’s been renting. They might not want to lose any equity they might have, but that doesn’t force them to stay.
What I hear mostly from people currently “stuck” in blue states – whether owning or renting – and claiming they “can’t” relocate, is things like “The youngest kid is almost finished with High School.” Or “I like the church I go to.”
It rather depends. Let’s say we have three guys, all nearing retirement, who earned about the same amount of money. Larry owns his house and has very little saved for retirement. Moe has been a lifelong renter and has spent most of his money along the way, so also has little in the way of a retirement fund. Between those two, yes, I’d rather be Larry than Moe.
Curly has been a lifelong renter but has invested all the money he didn’t have to spend on paying interest on a home loan, property taxes, higher utilities, insurance, and home repairs. Curly could have a sizable stash put aside that is growing at a rate that outpaces inflation. Curly might end up having a more comfortable retirement than Larry or Moe. In one town it might be dead-bang obvious that buying is a better value, in another town, renting may make more sense. There’s no universal formula that is best for everyone.
It’s a more complicated equation than that, since renters also pay property taxes etc, through their rent. And as I’ve mentioned previous, the people who rented the townhomes where I lived in Phoenix, paid more – significantly more – in rent than I did for mortgage plus insurance plus property taxes (largely because buying meant my monthly cost was fixed starting in 2009 while my income continued to increase), and their places weren’t nicely remodeled either.
I’d paid mine off 2 years before leaving Arizona, 4 years ago, while those people are still paying rent, and certainly even higher rent too.
But I was comparing apples to apples. Someone who is buying, and not saving, really is no worse off by just leaving than someone who is renting, and not saving.
Yes, they lose their “equity.” While a renter never had any equity TO lose. But in both cases that shouldn’t keep them living in a hellhole rather than leaving if it’s time to leave.
To clarify, an owner in a progressive jurisdiction may have to take a loss on the sale of his property to get away; a renter will walk away cost-free.
I know a homeowner who just broke even, exiting a declining neighborhood, even though the overall housing market was doing well at the time.
I was actually referring more to the “Desperation” case. If it came down to it, if someone had to leave their “owned” (which, if not paid off, my father used to call “buying it from the bank”) home WITHOUT selling it, then in effect they’ve been “renting” that whole time – and quite possibly paying less for THEIR “rent” than the person who was OFFICIALLY renting – and if they both have zero savings, then they’re still on the same level. Neither one of them leaves with any assets.
Being able to sell your home is a positive, even if you sell it for less than you think it’s worth; but if you CAN’T sell it, it’s not really a net negative, it just means you’re on the same footing as a renter.
Even if I had just left Phoenix without selling my townhome, I still had paid less over the time I was there, than the people who rented over that same period.
I wouldn’t have been able to buy the place I have now, but again, that would just mean I might be renting now, same as the other person.
It means you can’t move without a lot of headaches.
This is why they keep inflating the currency all of the time until everything collapses.
They don’t even come close to measuring inflation properly. They would whine about it being under 2%. It was over 5%. The current 3% is 9%. Then they don’t manage the side effects. It’s a stupid system. They should measure it honestly and keep it at zero at most.
And renters don’t have headaches when moving?
I’m talking about the fact that you have to lease it out unless you have one hell of a lot of money.
I’m also not sure about saying that it’s the same thing as being a renter.