Homeownership is about psychology. Taking out reckless drug use, the #1 predictor of whether a person will have mental health issues (from depression to schizophrenia) is the number of involuntary moves due to adverse economic circumstances. That feeling of being "chased", when coupled with low social status and economic failure, does psychiatric harm that takes decades to recover from-- especially in children.
Owning a home makes people feel safe. Renters know they can be priced out at the end of a lease cycle. (Most of the yuppie "luxury" buildings, because they target people who work obscene hours, pack an automatic 15-20% increase in the first year, just because people hate moving.) Owning may be a worse deal on average (expectancy) but it doesn't pack as much volatility.
The error is in the idea that homeownership provides protection. As the OP points out, a mortgage is just renting from a bank. If you have a catastrophic income loss, you're just as exposed to eviction. This can even be true if your mortgage is paid off-- if you lose the ability to pay property taxes.
I don't like being an involuntary renter (read: I made too many bad calls in my 20s) but homeownership in a city is almost always a bad idea. It's an investment that (a) you cannot move and (b) other people can fuck with by, say, building ugly things near it. The obscene cost of housing in most cities has far more to do with NIMBYism than natural supply/demand issues, when the real problem is just that urban homeownership is a pretty raw deal.
This analysis didn't even cover upkeep and transaction costs, or (even worse) the career-altering loss of geographic mobility. Urban homeownership is entirely about prestige and emotion; it makes no sense otherwise. But it's an enormously expensive hobby, making boats and cars look like childrens' toys.
Renting is throwing money away, but so is owning in most cases. The best we can do is to make housing a commodity (what suburbia originally intended to accomplish, but at horrific costs) or, more accurately, to accept the fact that that's what it is. That is, we need to tell the NIMBYs to choke on a dick and build high-rises (i.e. solve the supply crisis that is making housing more expensive than the natural $125-175/ft^2 level-- price of new house construction-- at which it belongs) yesterday.
Owning a home makes people feel safe. Renters know they can be priced out at the end of a lease cycle. (Most of the yuppie "luxury" buildings, because they target people who work obscene hours, pack an automatic 15-20% increase in the first year, just because people hate moving.) Owning may be a worse deal on average (expectancy) but it doesn't pack as much volatility.
The error is in the idea that homeownership provides protection. As the OP points out, a mortgage is just renting from a bank. If you have a catastrophic income loss, you're just as exposed to eviction. This can even be true if your mortgage is paid off-- if you lose the ability to pay property taxes.
I don't like being an involuntary renter (read: I made too many bad calls in my 20s) but homeownership in a city is almost always a bad idea. It's an investment that (a) you cannot move and (b) other people can fuck with by, say, building ugly things near it. The obscene cost of housing in most cities has far more to do with NIMBYism than natural supply/demand issues, when the real problem is just that urban homeownership is a pretty raw deal.
This analysis didn't even cover upkeep and transaction costs, or (even worse) the career-altering loss of geographic mobility. Urban homeownership is entirely about prestige and emotion; it makes no sense otherwise. But it's an enormously expensive hobby, making boats and cars look like childrens' toys.
Renting is throwing money away, but so is owning in most cases. The best we can do is to make housing a commodity (what suburbia originally intended to accomplish, but at horrific costs) or, more accurately, to accept the fact that that's what it is. That is, we need to tell the NIMBYs to choke on a dick and build high-rises (i.e. solve the supply crisis that is making housing more expensive than the natural $125-175/ft^2 level-- price of new house construction-- at which it belongs) yesterday.