Peter Schiff isn't the guy who's going to walk you through an open house and tell you to follow your heart. He's the guy who'll tell you to run—especially if you think buying a home is the best way to build wealth.
Last year, on "The Iced Coffee Hour" podcast, the economist and market strategist challenged the belief that owning a home is always a smart financial move. Schiff didn't hesitate when asked if buying made more sense than renting.
"For a lot of people—and this has been the case for a long time—renting is a better option," he said.
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He blamed part of the confusion on tax policy and government subsidies that have distorted the real costs of owning a home.
"There's much bigger government subsidies for buying a home rather than renting. And so that's caused people who might otherwise have been better off renting to buy instead because they're taking into account the tax benefits," Schiff said.
The hosts pointed out that, for many Americans, owning a home acts as their only real form of savings. Schiff quickly pushed back.
"Houses are expensive," he said. "A house depletes your savings. It's a money pit."
"There were a lot of people that were pressed into homeownership by overzealous realtors who make a big commission," Schiff said. "Realtors kind of perverted the American dream into homeownership—like that's the American dream: buy a home and get rich. As if the home makes you rich."
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Schiff went on to argue that the structure itself loses value over time, while only the land keeps up with inflation.
He warned that the long-term costs of owning—maintenance, insurance, and taxes—often outweigh whatever appreciation people think they're getting.
"You have to pay insurance costs that have basically doubled over the last few years," he said. "You have to pay much higher maintenance costs. You have to pay higher local property taxes. Everything related to buying a home is a lot more expensive."
And even if a house does increase in price, that doesn't mean the owner is ahead. Schiff explained that people often overlook how much they've spent keeping the house in shape just to sell it later.
"A lot of these houses too, if they weren't updated over the years, they're considered a tear down. What does that mean, a tear down? People say, ‘My house.' Tear down means a house that was once brand new and had a lot of value now has zero value. It's going to be torn down. The only thing that has value is the land itself. The house is worthless."
He also addressed the rising cost of borrowing, saying that even with prices staying high, many potential buyers are priced out because of today's interest rates.
"Not only do you have to pay these inflated prices and then borrow at, you know, seven, eight percent," Schiff said. "But you have to pay insurance costs that have basically doubled over the last few years. You have to pay much higher maintenance costs. You have to pay higher local property taxes."
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Instead of throwing money into a mortgage, Schiff suggested a more flexible and potentially profitable strategy.
"If you can rent for cheaper, then rent and take all the money you save and invest it," he said. "Don't just spend it… don't just buy a fancier car or take more vacations."
And if you're one of the lucky ones sitting on a low mortgage rate? He still doesn't think you should rush to pay it off.
"Why would you take any money that you have and pay off a sub-three percent mortgage?" he asked. "You could take that exact same money, put it in the bank, get five percent, and then use that to pay your mortgage and have money left over."
So if you're convinced a house will make you rich, Schiff would suggest doing the math—then doing it again. It's not that owning a home is always a bad idea. It's that too many people buy one thinking they're getting ahead, when all they're really getting is a bill for the roof, the plumbing, the taxes, and the fantasy.
For Schiff, the dream isn't granite countertops. It's liquidity, mobility, and the freedom to invest in something that doesn't need a new HVAC system every 10 years.
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