James Altucher. I have placed his name on my very special, relatively short list. Right under Daniel Gross. Just above Josh Altman (jealousy dictates that he be at the bottom of the list) and to the left of David Blitzer. Mr. Altucher is the man behind the list, er, “article” that appeared earlier this month on Yahoo! News bearing the title “Why I Am Never Going To Buy A Home Again”. His article, and his accompanying video wherein be appears to have just been woken up from the presumed squalor of his rented apartment and rushed to the filming, sparked a little controversy, as Yahoo! wagered it would. Mr. Altucher is candid in his disgust of home ownership, but his reasons against such ownership are anything but profound. Then again, would you expect something profound from someone who appears to so greedily embrace mediocrity?
Perhaps that’s what this home ownership retaliation is really about: a thoroughly deep and committed relationship with a mediocre existence. I am far from a housing apologist. Real estate ownership has indeed ruined the financial lives of millions of Americans, but is it the instrument of ownership or the failure to accurately navigate the ownership that results in ruin? I have been a renter many times in my life. By my count, I have rented real estate at least three times in the past eight years. I have used rentals to my advantage, and viewed them as little more than a means to meet my deeded ends. In order to understand why mediocrity is the friend of serial rentals like our new friend Mr. Altucher, follow me to a Christmas that I spent imprisoned within the vanilla walls of one rented townhouse.
To call the walls vanilla may have been a generous error. The walls were white. The carpet was brown. The countertops were plastic. The doors were hollow. The tile was tan. It was a prototypical American rental. I moved to this rental in the summer, when the windows were open and the doors were too. I didn’t mind this rental so much in the summer, and it was pleasant through the fall. Then winter arrived. A miserable, angry, unforgiving Midwestern winter. The doors were shut, the vinyl windows locked, and the $9.99 paper window blinds were lowered. Our sunny rental had become a bomb shelter of brooding. The white walls mirrored the white snow outside, and the brown carpet soon matted with the salty slush from our boots. My life was sepia toned, by unfortunate choice. Christmas came, and I bought a disposable plastic Christmas tree, a tree chosen to be plastic so I wouldn’t have to clean needles from my landlords carpet. Christmas came, and Christmas went, and my hatred for my bland prison grew.
I ended up moving out of that rental soon after, as the thought of perpetuated a cycle were the writing of a rent check without the ability to improve my living situation and scenery grated at my soul. I purchased a far-from-perfect bank owned home, and proceeded to tear it apart. I didn’t like the walls. So I tore them down. I hated the carpet. So I tore it up. I despised the kitchen cabinets. So I burned them in the back yard. The fire burned, fueled by the 70s inspired trim and cabinetry and hollow faux-wood doors. The housing mediocrity that another owner embraced, and that a renter would have conceded, I burned.
There were other reasons on Mr. Altucher’s list, other reasons that he hates houses. They’re too expensive he says. They’re too illiquid. They’re too this and they’re too that. Too hard to maintain, too expensive to repair. But one reason that simpler minded people might not buy is that housing, as a historical indicator, is not an effective way to build wealth. He sites an average housing appreciation of 0.4% between 1890 and 2004. It seems as though our fine friend has failed to take into account a curious little fact about home ownership- people rarely stay longer than 7 years in any particular home. As such, they tend to realize gains or losses based on the cyclical nature of markets during their ownership tenure. The same cycles that allow massive amounts of wealth to be built by some and lost by others. There are wise housing moves and there are poor ones, and if wise moves are made, returns can be so magnificent that they’ll leave Mr. Altucher weeping softly behind his rented front door.
The new anti-ownership sentiments are easy to adopt these days, as populist views turn an angered public against both the perceived wealthy and traditional symbols of wealth. Far above the financial and silly minimalist arguments against housing, there is one basic premise that will never shake the foundation of our nation’s diminished, but persistent housing lust. Home ownership, or vacation home ownership, is a vehicle that can, if done correctly, provide security and stability to any family or individual. There is freedom in ownership that no rented apartment can compete with, and if timed right, the financial gains that can be realized as a result of ownership are significant. Above that, ownership allows for as much improvement as ones personal preferences afford, and it allows mediocre surroundings to be made fabulous.
Today, I may rake some leaves after work, which is something any renter can do (perhaps Mr. Altucher can rent a rake from some rent-a-center, so that the burden of such a $14.99 purchase doesn’t dent his investment quota for the day). But today, if I so desire, I might also start applying a cedar overlay to my boring garage door. In doing so, I will have to work, yes. I will also have to spend a modest amount of money. The point isn’t that I need to dress up my garage door. And the point isn’t that I might have to spend some money that I might otherwise invest (in groceries or something superfluous) if I undertake this project. The point is that if I see a need for improvement, I can make that improvement at my own discretion, without pleading or permission. I can improve my life as I see fit, which is something a lifelong tenant can only dream of. Mr. Alucher, your white, drywalled prison awaits.
(CLICK HERE to view another take on this subject, sent to me courtesy one of my great clients. This article isn’t full of my vitriol, and as a result, probably makes more sense.)