Home ownership

I am growing fat. Not necessarily physically, but in other respects. In a sense I've been moving more towards a mode of stagnation, having climbed to what appears to be a local maximum, at least for the time being. I have become comfortable and somewhat lazy. And that is a horribly bad thing that must be changed. And change always involves risk, the jump to the unknown.

At this point I must also note that no, I have not purchased a home, unlike the title might suggest. I have, however, been thinking about home ownership. The current situation seems somewhat annoying: prices of homes in Finland have kept at record levels and the new home owner in the capital area will need to lay down closer to a quarter of a million euros in order to get a decent two room apartment at a reasonable location. That's quite steep.

Now, the question that is begging to be asked is whether or not one needs to own their homes. The current culture and the associated norms seem to suggest so: everyone should have a right to own their home. The trends in the western countries have been towards this direction for the past decades. In certain areas for much longer; for instance in the United Kingdom this trend seems to have started with the fall of the aristocracy, which traditionally was the only class being able own land and estates. With the fall of the aristocracy and the rise of the bourgeoisie the regular man could begin to fathom the possibility of owning property. The fact that property prices have seemed to historically grow rapidly has not really helped the situation: everyone knew up until recently that the price of properties would always go up. In Finland the trend for home ownership is further subsidized by the government, which gives tax rebates to the first home buyers. The signal is clear: the government wants you to own your home. But as the government tends to so often do, it has made a total hash of this as well, as the subsidy tends to go directly into the prices of houses and ultimately push up the already high price level. But the message is still clear.

The collapse of the housing market in the United States, however, tends to send a rather clear message: the direction was not sustainable. So not only does everyone not necessarily need to own their houses, but not everyone deserves to own their houses. In fact, to own your home, you must have income, jobs, and assets. The next question then is whether or not it is even beneficial to own your home. Certainly the world seems like a lot less risky place when you own your home. Especially more so if you've actually paid off your debts. But there as another side to this situation...

Consider the current working life. Job security has been seriously damaged, people are often working fixed term contracts, companies require employees to travel around and become expatriates, and so on. So is your home an asset or a liability? Well, from a flexibility perspective it's in fact quite clear: you are tied down much more if you have invested in owning your own home. Even more so if you have bought your home within the last two years, in which case you will not be able to get rid of your home without tax consequences in the event that you plan to turn a profit from it. So from this perspective you are selling off your flexibility to respond to potentially sudden opportunities. Also, by owning your own home, the emotional bond is that much stronger to the place you occupy. Having the sell your house, as some people who have been laid off have had to, is a bigger personal loss than merely deciding to terminate your contract and renting a new place.

It is very unlikely that we will return to an era of high job security. One of the competitive advantages for the future employees in the search for jobs is precisely the ability to adapt quickly to changing circumstances. And because this is the case, I am becoming increasingly certain that in the foreseeable future there is no point for me to tie my assets down in the form of housing property. That would be merely handicapping myself when I have already determined a very real need to slim myself down and regain my flexibility and begin to move more aggressively into uncharted territories.