Daily Archives: 14 July 2023

Owning vs Renting

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The cost of renting a house or apartment continued to rise last month.

Shelter costs, which account for about 40% of the core inflation increase, rose 0.4% for the month and are up 7.8% over the past year.

This emphasizes, for me anyway, one advantage of owning a home over renting it that gets little attention. That’s the advantage of locking in the “rent” rate, the cost of having shelter.

Having bought the house (assuming it’s done with a regular mortgage rather than one with a balloon payment after a few years), the owner now is protected from much of the damages of inflation: unlike rent rising (and it’s usually an annual increase, even with low inflation), the owner’s mortgage payment remains static—it cannot rise. Further, as inflation takes its toll, that mortgage gets paid with increasingly cheaper dollars, a phenomenon that’s made more apparent as pay raises occur—also, in the main (though not always), annually—even as inflation does not rise as quickly—which periods occur fairly often: those periods between recessions or stagnations.

And this: as interest rates fall, which they do relatively frequently, it’s usually possible to refinance the mortgage to a lower rate, and so to a lower monthly payment. Rents almost never fall (except in the most extreme economic conditions), and that increases the advantage of owning vs renting.

Of course, during times of high inflation, it’s much harder to buy a home in the first place—prices are much higher and rising, and interest rates tend to be high and rising. Once that upfront cost is met, though, the advantage is established. Rents are much higher, too, and rising, and so it’s also much harder to get into a rented home, but even after the renter is in, that cost continues to vary steadily upward.

Lastly, even in today’s government-diktated renting environment, it’s still harder to get thrown out of an owned home through mortgage default than it is from a rented home through rent nonpayment.

And none of that reaches the “investment for retirement” aspect of owning vs renting that is at the center of the most common form of the debate.

Activist Judges

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There are three of them on the 4th Circuit, those who unanimously ruled that construction on the Mountain Valley Pipeline must stop pending those judges’ personal review of the Interior Department’s record of decision for permitting pipeline construction in the national forest.

These judges don’t care that the 4th Circuit has no jurisdiction over the pipeline or cases related to it. The recently concluded debt ceiling law explicitly stripped the 4th Circuit of jurisdiction, limited questions about the pipeline to constitutional questions, and placed those questions solely within the jurisdiction of the DC Circuit.

The Wall Street Journal‘s editors concluded their editorial with this:

Three willful judges have improperly usurped the power of Congress and the executive branch. Judges who refuse to honor proper orders from the political branches are begging to have the political branches ignore their rulings.

These three judges also have violated their oaths of office and have thereby rendered themselves vulnerable to impeachment and removal from the bench.