I’m afraid I am giving the obvious answer here, but whether EAs, or anyone, should buy a home is a complex question that is hard to answer in the general case.
I personally might buy a home in a few years if I have access to artificially low interest rates on lines of credit (backed/guarantees by the US government, which is what makes the rates artificially low). It’s possible that that would increase rather than decrease my overall
potential spending, and therefore charitable giving budget, relative to continuing to rent. Your mileage may vary.
And that’s precisely the point, your mileage may vary. A lot of questions in this category have an implicit “ceteris paribus” clause, and with a big decision like this, the other things that are not equal between all or even most EAs are really important things like relationship status, where you live, plans for kids, etc.
Not saying these situations apply to the person you were replying to, but I can think of a few instances where this would be the case.
You buy a house that you think will substantially increase in value—This is never guaranteed, but there could be good reasons to think that the value of a house will increase over time, eg. the sale price seems low for what it is, you are planning to do extensive renovations, it’s in an up-and-coming area, etc.
You are bad at saving money—Buying a house forces you to put money towards an asset, whereas renting + trying to save may be more difficult for some people and they will end up spending more money than if they had a ‘locked in’ mortgage payment to make.
Buying a house would be cheaper than paying rent—In some areas, owning is cheaper month to month than renting (even when accounting for all the extra expenses that homeowners have to pay).
Yeah these reasons make some sense, but they don’t seem to acknowledge the points I made in my original post that there’s always a very real risk of not selling the home and therefore not donating proceeds to charity. It just seems safer to me from a donor’s perspective to keep your money as money (that is invested).
I mostly agree with your post from a purely financial perspective, I was just giving some examples where people might think that the potential financial benefits of buying a house are worth the potential risks you mentioned. I’ve got a friend who falls into the example you gave (doesn’t have/plan to have children, will leave his house to charity in his will), and this doesn’t seem like that terrible of a decision for him.
EAs who will/may have children however perhaps shouldn’t buy a home as, if they do, the pressure to leave the home to their children will be very great. There’s certainly no guarantee the child will use the asset to do good.
To engage with what you said a bit more, I find this paragraph difficult to reconcile with the idea that it seems much easier to have children when you own a house. Without that, your family will likely have to move around a lot more, your children may be forced to switch schools, you might have to deal with longer commute times when moving between places, you may deal with periods of insecurity (eg. if you live in a popular city it may be difficult to find a suitable rental at some points), your financial situation could be less stable (eg. you might have to accept significantly higher rents to stay in the same house/neighbourhood, or move to a different house/neighbourhood and deal with the previous considerations), etc. All of these could impact your financial situation but also your day-to-day wellbeing/the amount of security you feel. And if a person’s living situation is more stressful I could also see this impacting their performance at work and possibly their lifetime earnings. So this doesn’t seem clear-cut to me, even though I do agree there will be more pressure to pass the house along to your children as opposed to selling it and donating the proceeds.
(Disclaimer: Some countries guarantee more rights for renters that would negate some of the above concerns (eg. Germany), but if you live in the US/UK/Canada/Australia/etc, I would expect the above concerns to apply.)
I’m afraid I am giving the obvious answer here, but whether EAs, or anyone, should buy a home is a complex question that is hard to answer in the general case.
I personally might buy a home in a few years if I have access to artificially low interest rates on lines of credit (backed/guarantees by the US government, which is what makes the rates artificially low). It’s possible that that would increase rather than decrease my overall potential spending, and therefore charitable giving budget, relative to continuing to rent. Your mileage may vary.
And that’s precisely the point, your mileage may vary. A lot of questions in this category have an implicit “ceteris paribus” clause, and with a big decision like this, the other things that are not equal between all or even most EAs are really important things like relationship status, where you live, plans for kids, etc.
Why would buying a home potentially increase your charitable giving budget?
Not saying these situations apply to the person you were replying to, but I can think of a few instances where this would be the case.
You buy a house that you think will substantially increase in value—This is never guaranteed, but there could be good reasons to think that the value of a house will increase over time, eg. the sale price seems low for what it is, you are planning to do extensive renovations, it’s in an up-and-coming area, etc.
You are bad at saving money—Buying a house forces you to put money towards an asset, whereas renting + trying to save may be more difficult for some people and they will end up spending more money than if they had a ‘locked in’ mortgage payment to make.
Buying a house would be cheaper than paying rent—In some areas, owning is cheaper month to month than renting (even when accounting for all the extra expenses that homeowners have to pay).
Yeah these reasons make some sense, but they don’t seem to acknowledge the points I made in my original post that there’s always a very real risk of not selling the home and therefore not donating proceeds to charity. It just seems safer to me from a donor’s perspective to keep your money as money (that is invested).
I mostly agree with your post from a purely financial perspective, I was just giving some examples where people might think that the potential financial benefits of buying a house are worth the potential risks you mentioned. I’ve got a friend who falls into the example you gave (doesn’t have/plan to have children, will leave his house to charity in his will), and this doesn’t seem like that terrible of a decision for him.
To engage with what you said a bit more, I find this paragraph difficult to reconcile with the idea that it seems much easier to have children when you own a house. Without that, your family will likely have to move around a lot more, your children may be forced to switch schools, you might have to deal with longer commute times when moving between places, you may deal with periods of insecurity (eg. if you live in a popular city it may be difficult to find a suitable rental at some points), your financial situation could be less stable (eg. you might have to accept significantly higher rents to stay in the same house/neighbourhood, or move to a different house/neighbourhood and deal with the previous considerations), etc. All of these could impact your financial situation but also your day-to-day wellbeing/the amount of security you feel. And if a person’s living situation is more stressful I could also see this impacting their performance at work and possibly their lifetime earnings. So this doesn’t seem clear-cut to me, even though I do agree there will be more pressure to pass the house along to your children as opposed to selling it and donating the proceeds.
(Disclaimer: Some countries guarantee more rights for renters that would negate some of the above concerns (eg. Germany), but if you live in the US/UK/Canada/Australia/etc, I would expect the above concerns to apply.)