The recent jump in 30-year mortgage rates above 7% has sparked endless commentary on its impact on prospective homebuyers, especially young Americans entering the market for the first time. While the desire for homeownership among millennials and Gen Z is understandable — particularly, given its status as a societal rite of passage — a compelling new book by Jack Ryan and John Tamny argues that these same young Americans should consider delaying homeownership, for reasons beyond the current mortgage rate climate.
Ryan and Tamny’s “Bringing Adam Smith into the American Home” offers a brilliant, contrarian perspective. The authors begin by dismantling the main argument for homeownership — building equity — by pointing out that the average annual returns from home appreciation typically lag behind the potential gains achievable through investments in the stock and bond markets. Much of the appreciation we see in home values are artificial, inflationary gains in which the home appears significantly more valuable because the unit (dollars) in which the home is priced has been devalued, therefore requiring more dollars to purchase.
Read the entire article at Richmond Times-Dispatch
