100% wrong, 100% of the time

Felix Salmon tweeted a quote from this article today, which included this doozy of a quote:

"100% of the time it is better to rent, rather than own"

Like Felix, I was a skeptic on housing for a long time. I whined non-stop about housing prices between 2005 and 2009. Unlike Felix (I'm assuming), I purchased a house last year. I did it because, over a long enough period of time, I believe it's always better to buy than to rent. The question is how long it will take you to break even on your investment. If you buy during the worst of bubbles, it might take you 150 years to make the purchase worth your while. If you buy when rents are high and house values are low, or when house prices are going up, you can make your money back very quickly. Most of the time, the question is more complicated, and whether it is better to buy or rent depends on supply-demand questions that are very specific to each location, inflation rates, and the opportunity costs associated with alternative investment opportunities.

There are plenty of calculators that allow you to play with the variables, but, over time, paper money will lose value, rents will increase, and a house that is well maintained and in a decent location will be an excellent store of wealth, relative to other investment opportunities for most people.