A Case Against Home Ownership

In the 1946 film classic, It’s a Wonderful Life, Pa Bailey explained to son George that it’s the nature of man “to want to own his own roof and walls and fireplace.” In more modern parlance, home ownership is the “American Dream.”

Of course, less spoken of are the demerits of ownership, particularly as a distraction that can keep us from doing what we do best. We cover many of them in our new book, Bringing Adam Smith Into the American Home: A Case Against Home Ownership.

Smith looms large because he explained the negatives of home ownership so well in The Wealth of Nations. He wrote that people are much more likely to prosper “when the sole attention of their minds is directed toward that single object, than when it is dissipated among a great variety of things.” Translated, work specialization is the truest path to success.

Think of specialization when it comes to buying a house. It’s what we do in our chosen vocation that enables the purchase of one. So far, so good? Maybe not.  

While specialization on the job surely enables home ownership, think about what happens once we’re home owners. Suddenly we’re reduced to managing a dwelling which, if we’re honest, we understand very little about. Overnight, our responsibilities expand as we pivot from full-time expert in our chosen endeavor, to doing what we do best in concert with work as part-time superintendent of and financier of a space that we’re hopelessly uninformed about.

Seriously, what to do when the servicing company for the air conditioner says you need a new HVAC, the plumber says the water heater is on its last legs, the handy man says you need a new washing machine, or when the landscaper informs you that an aging tree in the backyard requires urgent, and expensive removal? How many of us could respond knowledgeably to any of the aforementioned problems?

Which is the point. As opposed to enhancing our economic potential, housing to varying degrees saps it as we’re forced to think about and make decisions about technical matters that are well outside our areas of expertise. No doubt we can throw money at these problems, but more than we’d like to admit it’s dumb money in pursuit of a quick fix.

It’s trite and true at the same time to point out that economics is all about tradeoffs, and on the matter of home ownership, what do owners lose in terms of time, effort and money spent on something that they don’t much understand? Better yet, we think home owners and potential home owners alike should consider the opportunity cost of building up equity in a home over thirty years versus building equity in the stock market over the same timeframe.

Our aim is to convince Americans to think harder about home ownership as the endgame, its frequently unspoken opportunity costs, and how much ownership of property encumbers our pursuit of opportunity well away from it. While we recognize that housing is an essential market good (Jack is the CEO of REX Realty, after all), our goal is to insert Adam Smith into the housing discussion, and ideally into the American home.


  • John Tamny

    John Tamny is a popular speaker and author in the U.S. and around the world. His speech topics include "Government Barriers to Economic Growth," "Why Washington and Wall Street are Better Off Living Apart," and more.

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