This is interesting:
Just how much should Uncle Sam do to help Americans buy their own homes?
For 70 years — and for the last 15 in particular — the answer has been: Whatever it takes.
Now, policymakers are pausing to reconsider. In the next few months, they’ll weigh whether there can be too much of a good thing when it comes to helping families finance the American Dream.
The rethink could mean a shake-up for a mortgage market addicted to government subsidies.
“This process of figuring out the government’s role is going to involve some hard choices,” says Alyssa Katz, author of Our Lot: How Real Estate Came to Own Us. “The moment you start changing the nature of what is guaranteed by the government, what is subsidized, you start to change the alignment of winners and losers. … We took for granted that anyone could get a mortgage.”
Using guarantees and tax breaks, the government pushed homeownership past 69% in 2004. Then it all came crashing down.
As someone who rented forever, I’ve never understood the fetish regarding home ownership. I can understand people with a couple kids they want to raise and knowing they will not be moving forever being really into buying a house, and I can understand why some might want to own a house, but the societal pressure on home ownership is one of those things that never made sense to me. “Why don’t you own a house?” is up there with “why aren’t you married” or “why don’t you have kids?” It’s just one of those things that you are expected to do, even if you don’t want to and are quite happy not owning a house. Not owning is nice. You can move whenever you want. If something breaks at 10 pm at night, you don’t have to frantically work to fix it- you call someone and it is their problem. If you change your job, relocating is easy. If you just get tired of your current location and want a change of pace, it is easy to move. You aren’t locked into a job, a mortgage, and a location. It’s nice knowing that if you want to move, you just need to get two u-hauls (one for your possessions, one to haul your cat) and you can beat a hasty retreat.
But then again, I am an odd duck, it seems. I went several years without a car and was pretty damned happy. I had to deal with the usual barrage of questions- “How can you do it? It isn’t normal! Everyone has a car!” When, in fact, the exact opposite is the case. Throughout human history, fewer than .000001% or less of the world’s population have ever owned a car (90% of statistics are made up on the spot).
So stop the mortgage deductions. Stop the tax breaks. Stop adding government incentives to something that really isn’t necessary and punishes those who don’t want to own. Works for me.
Xecky Gilchrist
“Why don’t you own a house?” is up there with “why aren’t you married” or “why don’t you have kids?” It’s just one of those things that you are expected to do
Yup.
Do you get as much crap about being “selfish” for the house thing, though? Not being married and not having kids cause serious offense, for some reason, especially if you’re a woman.
cleek
making it harder to own homes will likely mean fewer homes are built, which affects the home building industry from carpenters and electricians, to garbage disposal and shingle makers, the timber industry, carpet makers, plumbing supply companies, real estate agents, etc..
there will be pushback.
Amen Chorus
I think your way of thinking is the way of the future. I know several people who have relocated for jobs who cannot sell their old home. Yes, anecdotes are not data, but it does seem that workers need to be much more mobile than they needed to be 20 years ago, and renting makes one’s life much easier. Myself, as a young-ish academic, I don’t expect to even consider home ownership for some time…that’s fine for me, in part because I have absolutely no desire to take care of a lawn or clear gutters.
LittlePig
I agree wholeheartedly, and I’m a home owner (27 years in the same spot). About paid off too, but then I, like most Arkansans, didn’t go quite as re-fi crazy as the rest of the country.
I still expect the commercial real estate flopping will hit pretty hard though.
Xenos
A principled and pragmatic conservative argument against government intervention in a market. How refreshing.
I would like to argue that there are all sorts of beneficial side effects to home ownership, such as community investment, increased sense of community an so on. But since any useful social program seems to eventually grow to the point of absurdity and a self-serving yet self-defeating hypertrophy, a good round of real conservatism seems to be in order here.
We can revive Fannie Mae when we next need to spur home development so that a few million returning soldiers can find places to live and settle down.
MobiusKlein
Stability. It’s nice not having to move when the lady who own the house you rent dies, and the heirs want to split up the money.
As a single guy, you won’t find it so hard. A family of four, moving is a massive chore and can cost $^4
PeakVT
Stop adding government incentives to something that really isn’t necessary and punishes those who don’t want to own.
If only this country could be that sane. Instead, there’s a serious debate by our Very Serious Persons on whether or not to bomb Iran. Yeesh.
John Cole
@cleek: Even though I am in West Virginia, all our apartments feature plumbing and the other things associated with indoor living. Why would demand drop?
Ned R.
Unmarried, always been a renter, no kids, and no car (in Southern California at that)…and loving it, believe me.
Allison W.
At my college graduation our president’s speech was all about owning property ’cause owning property leads to wealth. Its a message that we hear often in the black community – owning property is the best path to wealth.
I would love a house, but can’t afford it. I listened to Suze Orman when she told people to sit down and really add up the numbers. Your rent may be more than the mortgage, but what about all the other monthly and yearly expenses? I listened. So it was completely baffling to me that so many people were getting homes with no money down, no income or not enough income and with all these funny shady loans.
Hawes
Well, this might be a nice time for the “mushy middle”. I own my house (well, the bank owns most of it), and I can’t do that without the various incentives. If the rules changed for me, we’d have to sell (which we want to do at some point anyway), and sell into a doubly depressed market glutted by the financial crisis and the newly minted rules.
So I’m assuming any changes to mortgage rules would have to be grandfathered in.
beltane
My big impossible dream for after the kids grow up is to sell the house and move to a small apartment in Europe, probably Italy, where everything is either in walking distance or is a train ride away. I detest having to drive to the doctor, the supermarket, or the drug store; it makes me feel isolated and cut off from my environment.
Growing up in Manhattan, I was spoiled by the complete freedom of movement. Our land use patterns (and the home ownership fetish has a lot to do with this) have contributed to a way of life that offers isolation without privacy.
mnpundit
“Now, policymakers are pausing to reconsider. In the next few months, they’ll weigh whether there can be too much of a good thing when it comes to helping families finance the American Dream.”
Thank God! I have 0 desire to own a home to be forced to do yardwork, pay property taxes and be responsible for it in general. I do not want to be tied down. It seems insane that home ownership is some kind of ur-goal in this country.
I want to keep my money liquid so it can do me some good instead of rot uselessly in a piece of land that I can’t take with me and is subject to the elements.
Fortunately my wife also does not want a house right now. She might want one eventually though and then we’ll have some fights.
Randy P
It depends on your market, I guess. In New York, I can’t understand why you would own an apartment although the reasons are probably the same as why I own a house where I live. But in NYC the economics just don’t make sense to me. You can either pay rent, or you can take on a mortgage, have to pay that cost every month, and then on top of that you STILL have to pay a maintenance fee which is about as much as rent.
The federal government subsidizes mortgages with that big tax write off. That’s the first big financial incentive. Second there’s that equity thing, assuming you have an old-fashioned fixed-rate mortgage where you’re actually making progress on the principal. Equity is genuine cash, a thing you actually own. My house is almost paid for, and when it is, I will own this thing, this asset, which is better financially than not owning this asset. And every dollar of equity you build up is an asset.
But what really got us out of renting and looking at buying was that we got tired of dealing with owners. One place we waited months to never to get plumbing repair. The bathtub only got repaired after months of waiting when the hot water knob came off in my hand and started spraying me with 160 degree water full blast. We got the handyman that same night by pleading “emergency”, but both he and the landlady were mad at us afterward and told us it wasn’t an emergency and not to bother them again.
My daughter is going through this now, and dealing with issues like a landlord who feels it’s his right to come strolling through the apartment any time he wants, without announcing his visit or even knocking. And to criticize her housekeeping, comparing it to the housekeeping of the other young lady whose apartment he likes to stroll through frequently.
LittlePig
@cleek: There will be pushback
Of course there will be. I’m sure the buggy whip makers raised holy hell about automobiles too. Fortunately the Congress then was quite a different animal than Congress now, or there would still be buggy-whip subsidies.
I had to retool my career when my job of 11 years went to Bangalore in 2003. It’s rough, and I’m still feeling the economic effects seven years on (still not making what I did then). It’s called life. It’s also called ‘progress’ and in most cases that’s exactly what it is.
I’m not real crazy about Tim Geithner’s way of getting Americans retrained (10% unemployment for years), but the idea is right: folks have to retool a lot more often these days, maybe several times in a lifetime. I just wish the American people could get the soft landing the banks, still sitting on several trillions of bad debt, are getting. But then reg’lar folks ain’t Timmy’s buds.
Allison W.
I don’t have a car either. I live in a city with great public transportation and a few people I know have suggested I get a car. For what?
jimBOB
Until the housing market (thanks to bubbles) came crashing down, it wasn’t that hard to sell if you priced the place right and were in a decent neighborhood. Furthermore, a house of your own means the ability to address any problem you had with the physical plant of the place as you want, rather than relying on a landlord (who doesn’t have to live with his/her choices). Not to mention that in many cities (mine, for example) there can be a dramatic difference in quality of life between rental neighborhoods and live-in owner neighborhoods.
John brings up the 10 pm breakdown as if it were a point in the favor of renters. Well, not in my experience. If it’s something simple, a homeowner can nip out to Home Depot and have it fixed right away, while the renter has to 1. get hold of the landlord; 2. wait for the landlord to get hold of somebody to service it; 3. wait for whoever that is to schedule you for attention; and 4. hope that whoever comes in has the necessary parts to make the repair. This can be a long wait if you’re talking about, say, a toilet mechanism or main faucet fixture.
chrismealy
I liked this quote via Rortybomb:
NonyNony
@John Cole:
Do you think that without all the crazy incentives and subsidies built into our system the level of new build construction on apartments would stay exactly the same as the level of new build construction on homes, or do you think there would be less incentive to build new apartments?
I suspect the latter. Take away the subsidies and the construction industry collapses because the target production levels on new build homes have been artificially inflated for decades.
But then I suspect that the entire home construction industry has been a smokescreen of government subsidy for the last 30 years that has offered up some bad incentives to keep our economy moving along so that no one would notice that we only have a Potemkin economy left. And to move money into the pockets of bankers, of course.
Genine
I like renting, too. It reminds me of a time I was having one of those “what would you do if you won the lottery talks” with a friend of mine and she was horrified when I didn’t mention “buy a house.”
My friend: “Don’t you want to buy a home?”
Me: “No”
My friend: “Oh, my god! Why?”
Me: “I don’t want to.”
My friend: “But you have to buy a home. You have to! It’ll give you stability and security!”
Me: “Won’t having millions of dollars do the same thing?”
My friend: “No!”
Me: “I rarely stay in one place long enough to consider buying a home. And I don’t want to fix anything or mow the grass.”
My friend: “It’s the investment that matters.”
Me: “Can’t I invest in other things?”
My friend: “Yes, but it’s not the same. You have to buy a house. You have to!”
I was completely amazed by the vehemence of her assertions. I was like “wow”. LOL
PeakVT
@Hawes: The net effect of the tax incentives is to bid up the price of housing, not make it cheaper. And if changes were made they’d be phased in over 20-30 years.
ken
When people ask me why I don’t own a house I tell them that it limits my job prospects. I used to teach math for the NYCDOE for 5 years. Then I took a job in an international school in Shanghai making much more money.
I have created a theory: In the 19th century you had to be able to move within your state. In the 20th century you had to be able to move within the country. In the 21st century you must be able to pick up and move to another country.
I think the economy has major problems, because people are stuck with their houses. I have no data, but I think if a lot of those people didn’t have homes, they could have easily found a job somewhere else in the states or the world.
But I am a single gay male with no partner and not a home owner, so I have options
Sentient Puddle
I’d naturally fit into that category of not caring about owning a home as well. My dad put a lot of pressure on me to buy a house, which included setting me up with a meeting with a mortgage banker (family somewhere along the tree). I probably wouldn’t have budged, but we did some back-of-the-envelope calculations about some potential price point, and I did a double-take at what my monthly payment was after considering everything (taxes, insurance, etc.). It was basically the same as what I was paying for rent. How the hell?
Well, it was real, and so now I own a house. Seemed like I’d be breaking some rules of rationality if I didn’t spring.
I still can’t quite grok it all, but yeah, there really are some perverse incentives for homeownership that the government puts out there…
Mike from Philly
Rent is money you will never seen again.
Mortgage payments go to property you will eventually own. Equity accretion makes it an investment, but any good realtor will tell you that don’t buy a home primarily to make money.
Historically, wealth accumulation for the middle class has been achieved primarily through home ownership. Problems arise when you try to put people in homes they cannot afford via dodgy instruments such as ARMS or interest only payments.
But since we’ve clearly declared war on the middle class, maybe we should all get used to the idea of living in whatever tenements our overlords allow us to rent?
Mark
John – lots of downsides to renting. The first place I lived in after college, I wasn’t on the lease (and couldn’t be put on it, by law). My roommate decided to move in with his girlfriend, so the landlord decided to jack up the rent even though the place was already renting well-above market rates.
So I moved into a new place with two of my friends. Great place, but eventually the landlord wanted to jack up the rent and I got tired of living with a bunch of people.
Then I moved into a nice place and the owners decided to sell it, so I had to move.
I didn’t have a lot of time, so I moved in with two friends of mine and the owner of the place dropped a huge rent increase on us because he wanted to move in.
So I bought a house. I’ve enjoyed doing all of the maintenance that was long-deferred on this place. I’ve learned electrical (wired most of the house myself, ouch) and plumbing and tile and realized carpentry was not my calling and that drywall looks a lot better when a pro does it.
Renting is nowhere near as flexible as people think. My mom lost her job and had 11 months left on her lease. She spent that time trying to find a job in a job market that wouldn’t have her (or anyone, for that matter.)
When you look at the state of rental homes vs owner-occupied ones in my neighborhood, well, you can see the value of the subsidies. People who rent out property tend not to value things like window screens (what happens to the screens???), a functioning heating system or a stove from after 1940.
And of course: how could I forget my wonderful dog?
Mary
The argument in favor of home ownership that I find most convincing is the fact that rent is basically money that you’re throwing away. Theoretically, when you purchase a house at a non-hysterical price (ie, not in the middle of a bubble), you pay your mortgage every month, but you’re essentially putting money back into your home equity. Rent is money you’ll never see again. Mortgage payments theoretically come back to you so long as you manage things properly.
That being said, I’m in no rush to own a home and have no plans to do so in the next 5+ years, despite being past an age where most of my peers own.
henqiguai
And yet sometimes buying becomes almost the only answer. I went into the ownership thing because it seemed every single apartment within sane commuting distance of the jobs market in this area was converting to condominiums. And you had two months to buy or move. So yeah, I bought – a house. The upside is I don’t have to hear every conversation or tune all my neighbors are blasting out.
But on balance I too would prefer to rent. Very unAmerican of me.
BC
Three reasons I own a home:
1. With fixed rate mortgage, I know what I will pay to live in a house from year to year. With rents, when the lease is up I may have an increase in my rent.
2. If I own a home, I can decide whether to have cats or dogs. Some landlords either charge more for dogs or don’t allow pets at all.
3. Yardwork gives an ADHD husband something to do.
Of course, the downsides are there as well. But renters pay for property taxes for their landlords and are not able to deduct them. Some states (I’m looking at you, North Carolina) have few tenant protection laws so that tenants can be at mercy of unscrupulous landlords.
Daddy-O
Renting is paying someone ELSE’S mortgage FOR them. It really is as simple as that, and there’s no way I could ever go back to doing that. As long as I have the money to make the rent, I have the money to make a payment.
Blue Neponset
The guy/gal who owns the apartment you used to live in got to deduct the mortgage interest. Why shouldn’t I?
Home owners don’t get special treatment. They get treated like any other real property owners.
dmsilev
I’m in process of buying right now because it makes financial sense. With market prices and interest rates as low as they are, I can buy for about the same cost as renting. Even without the tax incentives, having a quarter of the monthly payment (30-year fixed loans start out at about 75% interest, 25% principal) go towards equity rather than to a landlord is a long-term win. It’s in a condo complex, so a lot of the annoying maintenance work (ie mowing grass) are still subcontracted out, albeit at the cost of a monthly condo fee.
The downside is that there are substantial costs in both time and money associated with property transfer. For the property I’m buying, I guesstimated that between closing costs and the realtors’ commissions, there’s about $25K of costs, about 2/3s of which fall on the seller.
dms
twiffer
i’ve rented and i’ve owned. currently own. why do i prefer it? because it’s MINE! no annual rent increases. no landlord to tell me that, no, they’d prefer i not paint it even if i promise to return it to flat white when i leave. no maintenence or condo fees tacked on. no waiting on the landlord to get around to fixing things. i can do what i want, when i want, how i want, because it’s my place.
owning vs. renting is an individual choice and a highly subjective one. renting is, frankly, probably preferable in a city. if you aren’t in the city, and (in my experience) in a house, the hassle of having a landlord is not worth the savings of renting. there are many places where renting is just either not much of an option, or a less preferable one. and i really prefer no one else having keys to my place. probably the biggest factor, for me.
e.c.
for me, one of the major pros of renting is that i can live in a much nicer part of los angeles (west hollywood) than i could ever afford to buy in. I know i get the side-eye from a lot of people my age when they find out i don’t own a home, but i have no desire to move to some sketchy part of the deep valley just to join the home-ownership club (which seems to overlap with the get-a-signifigant-other-and-a-dog club).
chopper
@Randy P:
this. i live in NYC and rent (of course, i can’t rationalize spending $600/sqft on a place). moving would suck, but i’m lucky that i have an awesome landlord and what’s essentially rent control.
i would like to own a place somewhere else some day, but not because i’m nuts about home ownership, i’m a gardener and am not interested in breaking my back digging up someone else’s backyard. least of all a landlord who might not be too interested in me planting trees and shit back there.
Punchy
You know what you’re locked into? That ugly fucking home that you’re renting. You’re likely not allowed to significantly change it (add a closet, repaint it, put in wooden floors) without paying for all that out of pocket (and who’s going to pay for that without reaping the equity?).
A house you (and the bank) own can be modified, altered, custom-adjusted, etc. Plus, at some point it’s paid for, so when I’m 50 living rent-free, you’ll be paying rent until you’re 90.
cleek
@John Cole:
well, houses are usually bigger than apartments: more bathrooms, more fixtures, more plumbing, more lights, more wood, etc.. more cosmetic updates, more external surface, more driveway and landscaping, etc.. more lawnmowers and weed-eaters, too.
plus, the people who build custom homes aren’t the same people who build apartments. and though home builders could probably handle the work, people would have to change industries, business models, etc. – and people hate that.
not saying i disagree with your point… just that people would scream about the change.
MBunge
The primary reason for buying a house is that if you’re smart, buying can actually be much cheaper than renting. My house is just a tiny little thing down by the railroad tracks, but I’ve got two bedrooms, a good-sized living room and kitchen, a basement and my own garage. Getting an equivalent apartment would cost me at least $150-$200 more a month than my mortgage. Now, other house-related expenses cut into that some, but I still end up with more money in my pocket as a homeowner than I would as a renter.
Of course, this only works if you don’t buy the biggest house you can for the least amount down you can get away with.
Mike
Fwiffo
Right on. I’m 33 and haven’t ever seriously considered owning a house, and I avoided buying during the bubble when everyone was telling me I needed to buy. I don’t own a car. Yeah, my bike (a nice bike) gets stolen every other year, but it’s still a damn-site cheaper than owning a car. I don’t have an insane salary, but I can put a lot away (what would normally go into equity) and still have a lot of disposable income. I live near work and everything I need is within biking distance.
If I REALLY need use of a car, I have a friend willing to give rides. In exchange, he gets free use of my power-rack and weights which is a lot cheaper than a gym membership.
Jules
My reasons for wanting to own a home have more to do with a sense of security. It is probably irrational since the bank could take it from us if we stopped paying, but I never felt secure renting.
Landlords can sell the place you live or decide they don’t like you or die and the heirs sell.
Hate moving, I like having a yard, I like having more pets then a landlord would like.
We bought way less home then the bank said we could afford 15 years ago, so even during bad financial times we have not missed payments.
Unless something terrible happens when we are on SS our home will be paid for which makes the worrier in me very happy.
Home ownership benefits your community if for no other reason than most renters do not take of the outside of a property (and I mean in the sense of landscaping and things like that and I said “most” because when we did rent we still put in flowers and I have a friend who owns a number of rent homes with beautiful yards he maintains for his tenants) the way a homeowner would.
(I f I was young and childless and petless, renting would seem the better choice because you really can just move and see the world and yeah, I regret not doing that when I had the chance.)
Face
I call this The Timeshare Argument.
Still dont buy it. Equity is a fickle thing. You have it, until your city builds the water treatment plant across the street and Burlington Northern runs tracks 300 feet from your backyard. Then suddenly you dont.
Erik T
I would kill to be able to fix up the place I’m renting now. I don’t even care if I move out in five years and leave my improvements made by my out-of-pocket money. I don’t have the freedom to make that choice and it’s driving me damned insane.
Calvin Jones and the 13th Apostle
@Mark: Sounds like you had a lot of shitty landlords.
Chris
There are some advantages to owning, such as the ability to make changes (I’ve had to upgrade electric service for the computer systems in the previous house, or install air conditioning in the current one, and I plan to have a 240V car charging circuit added in the garage once I get some kind of electric car). As an interesting counterpoint to various others, though, I have a limited amount of family pressure to rent rather than own (from my dad).
Note: I am single and own the house. I do not mean I rent it from the bank via a mortgage; as I have said before, I am relatively well off. I made a pretty good pile off real estate in California by buying before the bubble, when owning became cheaper than renting, and selling during it, when the trend had reversed and the bubble was obvious.
Dropping the tax subsidy would have a pretty big impact (in the old sense of that word, before it got overused) on house prices if people were rational economic entities. But one might also need to do something about the capital gains exemption, which helped fuel that bubble. (I benefited handsomely from the exclusion myself.)
That, in turn, leads to another huge tax issue: the differential treatment of dividends, capital gains, and “ordinary” (W-2 style) income. It’s particularly bizarre in cases like “carried interest” income (in MLPs) but the fact that dividends used to be taxed at high rates and capital gains at low rates was one of the reasons companies were doing stock buybacks instead of dividend payouts, even though the latter were clearly more sensible if taxes were taken out of the picture. The benefit to the stock buyback went primarily to those with multiple millions of imputed income from stock options, i.e., CEOs and the like. This is a form of income transfer, from the putative corporate owners—often, to a significant extent, someone’s pension or 401(k)—to the C-level executives.
Currently dividends and capital gains are taxed sufficiently similarly to remove that particular incentive, and sure enough, dividend payments are on the rise. This is actually a good thing for the overall economy. I do hope, from a “social good” point of view, that any future tax changes made here take this sort of thing into account.
brendancalling
i’m in a different boat, because not only do i own, but I bought at the right time and purchased something I could afford. even with the home equity loan, my monthly payment is just under $500/month. In Philadelphia, that won’t get you a studio, never mind the space i need for a child.
not only that, but because of where my house is located and because of specific policies set by the University of Pennsylvania to encourage home-buying as a way of stablizing the distressed neighborhood that surrounds the University, my home quadrupled in value. even in teh downturn, i’ve got equity and I’m doing OK.
so I think I’ll continue to support that mortgage deduction, because my bottom line, which needs all the help it can get, benefits.
honestpartisan
@Randy P: Owners of single-family houses have to pay property taxes, for heat, and for maintenance of the various systems in dwellings (building envelope, plumbing, foundation, roof) in addition to their mortgage. In multi-unit home ownership situations like co-ops, you can achieve an economy of scale by having the building collectively finance the bigger-ticket items and charging it to the shareholders’ monthly maintenance (as well as property taxes). I don’t see a special financial advantage of single-family home ownership as opposed to cooperative home ownership.
That having been said, as a real estate owner (shareholder in Brooklyn co-op), I agree wholeheartedly that promotion of homeownership in general has scaled heights of absurdity in this country. Setting aside the mobility issues that others have raised, maintaining real property is serious — and often expensive and annoying — business and emphatically not for everybody. Hope I don’t sound too bitter.
MattF
I bought a condo in the late ’90’s because it was the cheapest way of making a significant long-term improvement in my housing. But, of course, that was then.
In any case, I agree with the proposition that rent-or-buy is an economic decision– there’s no inherent benefit to society in buying a house.
Brachiator
Is this a spoof? For 99.99999999% of human existence, automobiles did not exist.
It’s an odd conclusion jump from “financial services companies screwed home buyers” to “fuck home ownership.”
Home buying is an easy and easily understood way to acquire assets.
And if we are going to really go all tax code neutral, if people get married and have kids, why should they get a tax break or additional exemptions and credits? Doesn’t this pro-family policy distort markets?
And once the government health care programs get fully fired up, why not eliminate all itemized deductions for medical costs?
@Xenos:
There ain’t nothing sacred about markets. Intervention often comes from somewhere. Back in the day, Henry Ford increased the wages for his employees so that they could afford automobiles, increasing the market tremendously.
And if we were being consistent, eliminating the mortgage deduction for home owners, why not eliminate it for owners of rental and commercial property as well?
Has someone ever done this as a novel? The idea of America as a neo-Sparta where soldiers, and the elite, own homes, but the majority of the citizens do not? We could also limit government subsidized education to the military as well. Think of the effect on the markets.
D. Mason
This might have already been stated and if so sorry but I had to point it out. You forgot the worst part of “buying” a house – you still have to pay rent (A.K.A. property taxes) until the day you die unless you want to be out on the streets just like any other lessee.
Frank
Amen! Why should apartment renters subsidize house owners?
Emma
Can I give you a different view? I was never interested in buying a house… until my parents (in their late 60s then and on a very fixed income) were forced to move three times in two years because their effin’ landlords could charge whatever the traffic would bear while not repairing anything without being threatened with court procedures. The last straw came when their rent on a two bedroom, one and a half bath cottage with a leaky roof went from $900 to $2100 in one lovely swoop.
So now I own a house rather than dumping my parents into a government subsidized apartment for retirees, which are usually way out the hell in the middle of nowhere or in neighborhoods I’d rather my parents don’t have to negotiate.
Once they’re gone, sell the house and move to Europe. I even have the place picked out and started saving for the long-term lease.
sven
@Allison W.: I’m totally jealous; I live in a rural and red state so car ownership is a must (sigh!).
This brings up another point:
Why does anyone buy a new car?
Even a nice, small, fuel-efficient car costs $15000, more when financing is included. I’ve run the numbers over-and-over and my conservative estimate is that I save at least $2000 per year by driving an older car. Over a lifetime the savings are staggering, especially if the difference is invested rather than consumed. Lots of people I work with complain about how tight their finances are but have two cars they purchased new.
mantooth
Piggybacking on BC’s comment – I decided to buy 5 years ago when my boss, nearing retirement, came in one day and said, “Made my last payment on the house today, it’s like I got a $300 a month raise.”
It wasn’t just that I’d be free of the monthly mortgage payment in 30 years but that the payment would stay the same the whole time. $300 in 1975 was equal to nearly $1100 in 2005. It was a lot of money in 1975 but in 2005 it wasn’t. Even if I never get another raise inflation makes my house more affordable every year.
Ned R.
If anything the range of answers shows that there simply is no one size fits all answer to be had here, and I would hope we could all recognize that. A couple of the more extreme responses just put me in mind of the near-propaganda style sales pitches I get living where I do in SoCal.
I can fully understand many different reasons and rationales for owning rather than renting. Anyone who can’t demonstrate the opposite consideration is not being honest with themselves about those different reasons we renters have.
Kristine
I have no numbers on hand to back this up, and things may have changed over the years. But I recall reading several years ago that Canada had no mortgage interest deduction, and their level of home ownership is comparable to that of the US.
Do other countries provide tax breaks for ownership over leasing/renting? Do levels of ownership compare, other things being equal?
Home owner, fwiw.
Belafon (formerly anonevent)
Sorry, but this is nearly the same problem as restructuring Social Security. For years, the government has set up financing for buying homes, in part because they build stability in communities and families. People have agreed that taxes would be shifted into different areas because of this. And it’s how we pay for schooling here in Texas.
The wealthy are deciding that we can no longer afford this because then we’d have to tax them more. No thanks.
Frank
@Emma:
Do you mind me asking where in Europe? I have thought the same thing, but health care is the big obstacle.
dhd
One thing I’ve noticed is that the mortgage interest deduction is highly regressive – if you live in an expensive area or own an expensive house, it might save you some money on your taxes. If you live in a modest house, or in Pittsburgh, forget about it. In seven years of home-ownership I think I might have been able to itemize my deductions one or two of those years.
Along with actual regulation of banks, the lack of a mortgage interest deduction for homeowners is another reason Canada isn’t an economic basket case like the US at the moment.
Sentient Puddle
@D. Mason: But if all you’re paying is property taxes, it’s basically nothing compared to rent you’d pay for comparable living. It’s barely worth mentioning.
DecidedFenceSitter
I’m in the Northern Virginia area – my friends are paying 1.5 times as much as I am to live with a roommate. Every area is different, but I agree with the “In the city, rent; in the suburbia dither, in the country, buy” thought that seems to be running through several of these.
So why did I buy?
Constant price, not only am I saving about 25% versus renting, but it isn’t going up. Yes, I’m going to have to repair the water heater when it goes, the furnace, eventually, and the roof some times, but these are budgetable in that 25% margin.
I’m in a fairly well settled area, and thanks to being in the shadow of Washington, DC, I can generally find a job in my field (Industrial and/or Computer Security); hell worst case I can go back to doing business development/proposal writing. As long as there are gov’t contractors, I’m employable. Plus, there’s always going “blue” and becoming a Fed directly.
The time was right. While managing to sell our old house at the bottom of the curve, it gave my new wife and I the time to purchase the perfect house at the bottom of the curve. It isn’t a McMansion; however, it has 3 bedrooms, 2 toilets, and a yard, and is within a mile of the sister-in-law; and 2-3 miles of several other friends (who might as well be family) in the area.
So that’s why.
BTW, thank you all for you assistance, we did qualify for the upgrade in home ownership and the $6,500 was quite handy.
—
Oh and as far as why to buy a car new? Perhaps not the most glorious of reasons, but because I could. I bought a nice new Honda Fit with exactly the options I wanted on it. More importantly, it has 83 miles on it the first time I drove it, which means that it wouldn’t likely conk out on me, and if it did, then I had the warranty. Yeah, probably could have gotten around it; but hey, now I don’t have to worry – so it bought me peace of mind.
Betsy
I think this is a good corrective to the fetishization of home ownership as not simply a personal financial and life decision, but a symbol of true citizenship.
That said, there are disadvantages to renting, as people here have pointed out. I’ve had to deal with some truly evil landlords in my day, and one CRAZY landlady (she once started smashing out a cracked window that we’d complained about with a hammer, with no warning and no dropcloth. We found glass shards all through the place the entire time we lived there).
I am still happy to be renting and don’t plan on owning any time soon, but there can be a real sense of powerlessness with renting. I understand the desire to escape that.
p.a.
Home ownership as a big deal coincided with the move from the farm to the city in the early 1900’s and then especially with the post-WWII baby boom/GI Bill/America the world’s only not ‘rubble-ized’ economy generation. 15 year mortgages at 3% interest with inflation running 2%-4% (nominal) and jobs-for-life at US Steel, GE (my folks), Xerox, Kodak, IBM etc. etc. etc. Yes there were exceptions of course, but not a bad deal especially for working class people who would have a hard time accumulating wealth any other way. Raise the kids, sell the house, move South, live off the pension(s)- remember them?- with Social for the fun money.
Tax Analyst
I’ve avoided home-ownership for the same reason I’ve avoided the similarly-American-mandatory “getting married” and “having kids”. I appear to be allergic to anything resembling a long-term commitment. With that in mind I try with all my might to avoid getting into situations that seem to lead in that direction.
Yeah, I get nothing from the rent money I pay (and have paid for 40+ years), but in return I have to spend exactly zero hours/minutes/moments doing home maintenance and repairs and making home-owner type decisions about things that I really could care less about.
I noticed a commenter who was dissatisfied with renting had a lot of negative experiences and I can certainly see and agree with some of them, but the one thing that stood out was that well over half of them involved having roommates. My personal take on that is that roomies are more-or-less OK until you start approaching 30, at which point their quirks and eccentricities start to get old and aggravating really fast (I’m sure mine do, too). When I was still more-or-less a kid (under 30 in my book) having people around all the time was often fun and it was not that hard to ignore some of the bs, but as I got a little older and developed more personal preferences I found that having other folks – with their different personal preferences – around all of the time really started to get on my nerves. I let one of my older brothers move in with me at one point as he was returning to the area after several years in Florida, and we got along quite well for the most part – we had quite a few similar interests, but even that wore out it’s charm at a certain point. When I needed to move for work reasons I decided I wouldn’t do any roommates again. It was the best living arrangement decision I ever made.
Emma
Frank: Scotland. I checked here (old list and the prices have gone up but not insanely so), and I figure that as a non-smoking individual, with not only social security (whatever it might be in 12-15 years) plus two retirement funds from different employers which are completely mine and they can’t screw around with, I can swing those monthly payments.
Dee from Texas
I was an apartment dweller for years, until I yelled, “I can’t stand moving anymore!” and went to the Big City so I would always be able to job-hunt inside a large metro area. And then I rented a house.
Well, that house got foreclosed on! I spent six nervous months wondering when I’d be kicked out by the mortgage company. Fortunately the VA wound up with the house and offered it to me at a fixed price and an attractive mortgage–which I accepted gladly.
Any financially crazy purchase–is crazy, and being tied to a home is bad if you have to pull up stakes. On the other hand, although I have no kids myself, I can imagine what it would feel like to say, “Well, kids, we’re going to have to move away from your school and friends. The landlord raised the rent.”
Gozer
My wife and I recently bought a house and were basically apartment people for the previous portion of our lives.
Bottom-line: We hate homeownership. Our house is nice and in a nice neighbourhood with increasing property values, but as people who’ve never had to take care of a house before (I haven’t lived in a house since I was 8). It’s really turned into a chore. And we have freaky conservative neighbours that regale us with tales of global conspiracy and how the “white-man is losing out”.
All told I prefer apartment living in DC to exurban-PA.
Mike
But my mortgage is at least 3x what I paid in rent. I’ll be dead before I break even.
Walker
The problem with removing the tax deduction is that it is a major distortionary factor in housing prices. Once you remove it, prices will drop accordingly. Unless you are planning to cram those price drops back onto lenders, you are going to see a lot of pushback on this.
Nutella
The problem is the assumption that buying a house is always a good investment because real estate prices will always go up. As everyone sane has always known, that’s not true.
Even in markets where real estate prices are going up, owning your own home is not always a good investment. Unless you are quite sure you are going to stay in the same place for more than five years and also quite sure that real estate prices will stay steady or rise then buying will usually be MORE expensive than renting.
Someone said that owning property is the basis of wealth. No, investment is the basis of wealth provided that the investments you chose grow over time. Investing in something that doesn’t grow over time has the same effect on wealth as blowing that investment money at the racetrack.
Nom de Plume
Longtime apartment dweller here. At least in my case, paying rent every month has not been “throwing money away”. On the contrary, it has allowed me a standard of living I otherwise couldn’t have had. I run my own business, and having relatively low overhead on my living arrangements has not only allowed that business to survive, it’s let me afford other things (like a decent car and other toys) that I otherwise might not have had. In fact, in my apartment complex I see cars that one would normally see outside an exclusive country club. And this particular complex is not rich by any means.
Jules
@D. Mason:
You are right about the property taxes except I live in Arkansas and my property taxes are less the $400 becasu e of this:
http://www.arkansas.gov/acd/homestead_tax_credit.html
Yes, you read that right. We have insanely low property taxes…and get this….people bitch about them all the time.
Tsulagi
Don’t see how you’re locked into that through home ownership. If I were to move to another state or country taking a job there, pretty sure there would be homes there to buy or rent. Buying or selling a house isn’t that difficult.
Main difference is who’s the landlord and what rights they have. Owning my house the landlord is the mortgage holder. If I make my payments on time, they can’t raise the payment or tell me shit what I can or can’t do with the property. No so if renting. With notice the landlord can raise the payment or even tell me to move. Whether I can have a pet or not. Tell me not to put any paint or hang any pictures on their glorious beige walls.
Only downside to home ownership I can see is if you have a SO who thinks the house is canvas for her vision thing and you’re the fucking brush. Who thinks you can move or remove walls as easily and quickly as moving a sofa. Then it can suck.
sven
@Emma: That’s amazing, wish I could but insurance in Scotland!
A few years ago I had to get a prescription while in Wales, the doctor apologized twice because the cost would be out of pocket. It came to about $7…
Have I mentioned lately how much I hate our health care system?
I hate our health care system.
A Guest
My two observations based on all of the “I Got Mine” arguments we see here: 1) Everything in life is a Prisoner’s Dilemma. 2) Everyone always defects.
Walker
@Daddy-O:
Renting is paying a property manager to handle all maintenance of the property. If you landlord is not doing that, you are getting ripped off.
It is also paying property taxes and insurance on the property. Things that you would also have to pay (and not get back) if you were an owner.
Frank
@Emma:
Sounds very nice!
Do you know how they treat people with pre-existing conditions? Are they covered by this or is it the same as here that they are automatically rejected? I checked your link but couldn’t find any information.
Nutella
Also, too, a public policy reason for favoring home ownership is that home owners are more politically conservative. It’s the ownership itself that encourages conservatism: If you can’t pull up stakes and take off you’re going to want to keep everything the same where you are.
So if you consider political conservatism a good thing you’ll favor home ownership as policy.
Scott P.
All of these renters’ horror stories seem to result from renting from a private individual. I would never rent from a private individual, but still have no problem renting.
numbskull
There are obviously objective or semi-objective pluses and minuses to ownership and renting. Lots of good ones here. I think it just boils down to individual preferences and circumstances. It was easy for me. One early morning while lying in bed staring up at the ceiling, awake because for the umpteenth time that month my upstairs neighbors were arguing after coming home in the wee hours from another bender, I figured it was time to take more control of my situation. The decision was made easier (but caused part of the sleeplessness) because I had recently discovered that the upscale apartment rent I was paying was about 30% more than monthly payments on decent (but older) homes only half the distance from my job were going for. We had also rented houses before, but man, there, you definitely and deeply understand that you’re just paying some other guy’s mortgage and you largely have the same shitty problems that come with homeownership. Yeah, the landlord is _supposed_ to fix that shit, but in reality…
Mary
I bought my Fit brand new in 2008. I freakin’ love that car. I knew it was exactly what I wanted, but since it had just arrived in the country the year before buying used really wasn’t an option.
liberty60
If there are any attorneys lurking about, they can probably explain the “bundle of sticks” theory of property ownership, but basically when you “buy” a house, you are not always buying what you think you are buying.
For instance, as has been pointed out, when you buy with very little down and a 30 year adjustable mortgage, you are still subject to “rent” increases which are beyond your control.
But if you are disciplined and determined, and pay off the damn thing you can live rent-free for the rest of your life.
But in our culture, we have promoted the notion of sucking the equity out of the house every few years, so many people will never live long enough to pay off their mortgage; they are essentially living with rent payments for life, subject to periodic increases whenever Tim Geither decides it is time to adjust rates.
But beyond that, in many communities, your ownership itself is under question. If you live in a place with CCRs or a homeowner’s association, your ability to alter or remodel “your” property is severely limited; I have seen some HOAs become so strict that you lose even the power to decide what flowers you want to plant in “your” front yard.
Under some circumstances, what you end up with after emptying your life savings for a down payment, is the right to live in a house/ flat that you can never paint/ garden/ alter or remodel, where your actions and behavior are subject to the scrutiny of others, your monthly rent is subject to wild increases, and you will never live long enough to see any of it end.
Calls into question what it even means to “own” a home, I think.
D. Mason
@Sentient Puddle:
@Jules:
I am aware of low property taxes, the property taxes in the neighborhood I live in are between $600 and $800 yearly for all but the newest houses which were built during “the bubble”. And yes that’s a small amount yearly to pay but it must be paid regardless and can also be raised depending on how much the landlord values his property to be worth. That’s what rent is. Should people “buy” in low rent areas? Obviously. Are there areas where your rent continues to be repressive even after you “paid off” your home? Absolutely. I wonder if the property taxes in those places were enough to chew up a social security check when those nice folks “bought” their home originally.
My point was not that all property taxes are so much that its difficult to pay them. My point was simply that ownership is an illusion when it comes to real-estate. Plenty of people lose the home they lived their whole adult life in, raised their kids in, retired to and counted on to be their childrens inheritance(after having invested everything into it) because the wrong spouse died first and widow/er wasn’t ready for that $1400 bill at the end of the year.
Emma
Frank: I’m wondering about that myself. I have a feeling that it would send the price through the roof… I did find this. I’m still 15 years away from retirement at least, so I’ll worry when I get there!
soonergrunt
I’ll go you one better–how about removing cost of domicile, whether renting or buying, from taxable income? After all, if you can’t afford either rent or mortgage, you probably aren’t making a lot of taxable income in the first place.
And as far as the rent vs. buy issue, I rented for 8 years after I left the regular army, and I got a lot more value for my money, leaving aside the whole ‘building equity’ thing, from buying than I did from renting.
tisalaska
I would still own without the tax subsidy. If you treat it like any other investment and pick wisely, not hang on to the emotion of it and have a exit plan plus not use it as a ATM machine its still a good investment. A bit of a forced savings plan with the added benefit of picking your own plumbers butt crack to be disgusted with when things go the wrong way..
numbskull
@Nutella:
Interesting hypothesis, but I don’t know that the data are on your side. If you control for age, I suspect you’ll find that, to paraphrase Gilbert and Sullivan, for every little conservative homeowner out mowing his front yard in plaid shorts, there’s a little liberal mowing his back yard in torn jeans. Of course, they both wear sandals, but only one wears black socks. But that’s another story.
And as to a politcal semi-conspiracy side to this, I think you’ll find that helping people into homeownership is supported by liberal and conservative pols, but for very different reasons.
birthmarker
@Belafon (formerly anonevent): Just more warmed over ownership society bull, isn’t it! Only the landlord will be the owner. They will get to keep their tax breaks as business deductions.
Boy, if the repubs take the house they are going to go ape s*** crazy, aren’t they? What have we lost in the last week? Social security, pensions, public employment, paved roads, street lights and homeowner tax breaks. Whoo-hoo!
Jamey: Bike Commuter of the Gods
Agreed. Speaking as someone whose mortgage is paid off (how? save, buy less house than lenders say you can “afford”, lather, rinse, repeat…), I say the mortgage interest deduction is to borrowers what the post-Cold War peace dividend was to American tax payers: Illusory at best, an out-and-out lie at worst.
Getting back 20-40 cents on a dollar that you don’t have to spend in the first place is perhaps the most awful bait-and-switch tactic allowed by law. So let’s change that law…
Jason K
The posts of “gee I found out how much a mortgage would cost vs renting and I was shocked! I just had to buy a house!” make me laugh because I was the same way 10 years ago. If I had known just how much more money flows out of the checkbook due to home ownership I would have had serious second thoughts. Stuff like: serious problems with the connection to the sewer line. Costs multiple thousands of dollars to fix. Heat or AC replacement. Thousands more. Ridiculous property taxes. Blah. Blah. Blah.
The cost of home ownership is so much higher. Don’t just consider the monthly mortgage vs. rent costs.
Jamey: Bike Commuter of the Gods
@cleek: True, but only to the extent that increased demand for rental properties will fill the void…
Remember November
I live in suburbia, own a house, refinanced it ( tho thinking again as rates are so low) to add a second floor. I could sell now and walk away with 100k clear, but I was lucky and bought pre-burst. That said owning a house comes with its own special joys- had to replace anodized water main from street that corroded. Replaced septic tank that caved in ( luckily no one fell in! ) and have a detached garage that is becoming home to squirrels which I need to get a frikkin permit to demo.
birthmarker
@Nom de Plume: This is funny coming right after Nutella’s explanation of appreciating and depreciating assets. I’ll take my chances with real estate being worth more over time than a car any day.
mantooth
@Nutella:
Then how would you explain the homeowners here? This isn’t exactly the Free Republic. You may want to steer clear of sweeping generalizations.
Frank
@Emma:
Thanks for the link. Interesting website with lots of information. I’ll read and see if I can learn more.
Allison W.
@sven:
yep. nothing wrong with being a used a car. More money I save the better.
jman
I bought a house to pay for the old folks home when I’m decrepit. The house will be a post retirement project. I pay more in property taxes now than I used to pay in rent 20 years ago but rent is probably more than double what I used to pay. The assessor has reduced the value of my structure due to the market but don’t know if the devaluation will reduce my property tax. Both the house value and the retirement funds have taken a big hit in the last year and next year is looking bad too. The important thing to me is what it’s worth when I need it and I can wait another 20 years to cash out.
Nutella
Let me explain:
Anyone, DFH or tea partier, may buy a home. Once somone owns a home that person will be more likely to wish to preserve the neighborhood as it is in order to support their real estate investment than they were before. This is not the same as saying that buying a home instantly turns the DFH into a tea partier. All owners are more likely to spend time and money improving their own property and the neighborhood because it is in their direct interest to do so.
The problem with using the word ‘conservative’ is that it has so many contradictory meanings now. I’d call neo-cons radical rather than conservative but that’s because I prefer the traditional meaning of ‘conservative’.
AnnaN
I own my home so that I can do whatever I want to it (decorating/remodeling) and adopt as many animals as I want from the Humane Society without having to worry about a non-refundable damage deposit.
Free to be meeeeeeeeee!
Daddy-O
@Face: Equity is only a fickle thing when the REPUBLICANS bring about their regularly-scheduled recessions and depressions.
And your encroachment/easement example of a loss of equity? So rare as to be dismissed before you even brought it up…a non-applicable issue, to say the least.
I’m so old, I remember when I was a real estate agent during the mid-to-late 80s real estate boom, when I was told to tell potential buyers that a first home usually rises at least 6 percent per year in value, and it was true. That was when a home was a LOSS LEADER in investments, back when ten percent was considered LOW for a stock portfolio’s yearly annual increase…
My, how times have changed. But no matter what you paid for a house in 1987, it’s now worth at least three times that. Unless you’re buying a first home as a Ponzi/Dutch tulip price-gaming scheme, you will not ever lose money buying a house. It’s your own private piggy bank.
AuldBlackJack
So, all the other government subsidies, incentives and deductions (you know, the ones for the wealthy donor class) get to stay in place while, once again, the middle class takes it up the ass….first. Great plan. While we’re at it let’s fix the national debt by ‘cutting entitlements’ like Social Security .
gmckhool
@Mike from Philly: Don’t forget, a good portion of a mortgage payment is interest: that is money “you will never see again”.
MarkJ
The main flaw in the arguments of the people advocating for less home ownership is that they seem to assume that you can rent a place for free – i.e. that if you weren’t sinking that money into a mortgage you would be investing it in some other asset (stocks, bonds, retirement account, etc). Last I checked this is not the case in Washington, DC where I live – that money does not go into investments, it goes toward rent.
I pay approximately $1,500 for a one-bedroom apartment. A mortgage on a $400,000 house would be roughly that much. If I bought said house I would probably have an extra bedroom or two and all that money would come back to me at a later date rather than going to my landlord.
Home ownership per se is not what caused the housing crisis, and government programs are not the reason for the collapse of the market. Lax lending standards and unsavvy borrowers were the problem. I blame mostly the banks – they have all the information they need to lend only to those who pose a good bet, yet they made a lot of bad bets anyway because they didn’t use the information they have at their fingertips.
That said, I have no problem with abolishing subsidized home ownership. IMO those subsidies primarily just drive up the price of a house and if you eliminated them the same folks would still buy, just at lower prices.
Nom de Plume
@birthmarker:
This is funny coming right after Nutella’s explanation of appreciating and depreciating assets.
Appreciation of assets is fine, but that’s not the sole goal of everybody. I just used “car” as an example. I could just as easily have said that I take a vacation every year, or that I’m able to afford quality leisure time with friends, which isn’t an “appreciable asset” either. I’m talking about simple quality of life, and if I’m happy with mine, what else matters?
Daddy-O
@Jason K: Of course you have valid points, but remember this: For every penny you spend maintaining your house, that’s another penny in its equity and rising value.
That’s simply how it works, generally speaking, for the vast majority of house purchases.
And: Today is probably the best time to buy a house, ever. Bargains galore. Interest rates are lower than at any time in my life. You’ll never spend LESS to purchase a home than today, thanks to the Great Recession and the housing bubble.
As another commenter said: You’ll eventually pay your house off, if your plan is a good one; if you rent, you’ll be paying long past the age of 90–until your dying day, to be more precise.
Cat
If you remove the incentive to own a home where are the old people going to live?
They sure as hell can’t afford to rent some place to live while on social security!
The 30 year fixed mortgage is probably the only reason a large portion of the retirees from the middle class aren’t homeless.
edit:
I should say subsidized mortgages.
Tax Analyst
@Nom de Plume:
Yeah, this.
Or like one of my cousins used to say when he was a little kid when someone tried to “correct” some of his imaginery games, “You pretend to your business and I’ll pretend to mine.”
Daddy-O
@gmckhool: You DO see that money again, or part of it, in your Federal tax refund. Not in your rent, though…
There are many different loans to take out; the shortest loan with the largest payment and the fastest repayment time are the best, naturally. We have a ten year loan and we’re paying 4.675%. We just got it last year; now rates are below 4%, but it’s probably not worth it to re-finance. The difference of 5/8ths of a point in the interest wouldn’t be worth starting ANOTHER ten year loan, with the interest amortization front-loaded.
We’ll just grit our teeth and stick it out for another nine years, unless they start paying ME to take out a loan, like they do the banks. I’m not going to lose any sleep wondering how much LOWER of a rate we COULD have gotten.
Zuzu's Petals
@beltane:
I have a similar thought, only it doesn’t involve Europe.
I’m retired and single, and will probably move to be closer to my son and his family in Portland in the next couple of years. Luckilly it’s a city that rates high on places to retire – great public transit, etc.
It would make sense to rent from here on, especially since the kids would not feel terribly pressured to stay there if their circumstances changed (“Oh crap, our parents all bought houses up here so now we’re stuck”) . On the other hand, selling my house here makes me a little nervous. It will be paid off in a few years and I likely could never buy another one at this price in a neighborhood like the one I’m currently in. It feels like a real leap.
The alternative is to rent my house out for the first couple of years after I move, then make up my mind. But that brings its own complications.
birthmarker
@Nom de Plume: Quality of life and home ownership are not mutually exclusive.
I bet!
Lifelong renting + expensive vehicles = family members getting to pass the hat to pay for your funeral when you die. (I say this as someone who was financially able to contribute to a funeral two weeks ago.)
Zuzu's Petals
@Sentient Puddle:
Well when you consider you were paying your landlord’s mortgage, insurance, taxes, etc. maybe it isn’t so surprising your own ownership costs would be so similar.
mattt
First, there’s no punishment involved. That’s right wing, watb framing. The EITC for poor people does not “punish ” the rich.
Nom de Plume
@Tax Analyst:
And not to freakin’ mention, being freed of the responsibilities of home ownership has allowed me to work all those half-days (12 hours) that are necessary to grow a business.
Everybody’s mileage varies. This “my way is the only way” crap grows thin.
toujoursdan
@Nutella:
I think it’s a pretty safe assumption that home prices will start a long term trend down.
Because of the gutting of 401ks and retirement pensions, the decline in Social Security earnings vs. cost of living and other factors, few people reaching retirement have enough money saved for a comfortable retirement. Their home is their most valuable asset and they are going to want to convert it to liquid assets to live on.
There is that huge demographic bubble of 80 million baby boomers reaching retirement with the expectation that they will sell their home and live on the nest egg. For many, it’s their only choice. But there aren’t enough Gen X, Y, Z buyers to purchase these homes. Demand isn’t going to equal supply, particularly in suburban areas.
Nom de Plume
@birthmarker:
Quality of life and home ownership are not mutually exclusive.
I agree. And if I’d ever said anything like that, I’d hope you would correct me. Let me know if I ever do.
Lifelong renting + expensive vehicles = family members getting to pass the hat to pay for your funeral when you die.
Lifelong renting + expensive vehicles does not = not building a house when you retire. Which is my current plan, and I’m on track for it.
Chuck Butcher
Judas Priest John,
First of all homeownership helps stabilize rents, the rentals are in competition with a fairly large ‘other’ market.
The idiocy of the past decade was thinking a house is a money making investment – it is a piggy bank. You don’t break even, ordinarily, but you will have a good percentage of money paid out at the end versus absolute zero as a renter.
There is good sense to limiting the mortgage deduction to a level tied to median income (so it floats) rather than subsidizing McMansions and actual real wealth’s ownership because that does absolute spit for spreading a market down. Unrealistic financing drove this crash, not the concept.
For many, as you state, home ownership isn’t realistic whether due to lifestyle or finances. That is another thing altogether. If you have a job where you have to sell every few years there’s no way you’re piggy banking unless your down is a large percentage of the value. If your payments are almost entirely interest and taxes by the time you pay realtor fees and etc and new loan fees you’re going backwards.
I’m in construction and yes, the mortgage deduction does help my business. My industry also helps a lot of associated industries – a lot of them. That is one reason this recession is so deep and so extended.
Keeping the housing market, rental and ownership, from degenerating into another plutocratic market makes good sense. That sure doesn’t mean ownership is for everyone, but keeping the market available to a broad sector is a good idea. You start from narrow cases and leap into a broad conclusion with huge economic outcomes that you wouldn’t like.
Ruckus
The question of why we as a country want home ownership was easily answered for me when six months into my last job, the president of the company found out that I’d bought a house and was beaming. They had paid 2-3K for me to move and now he knew I’d be staying and they’d get their money back.
Several have talked about being in one place and it seems from the people I’ve met over the years there are 2 kinds of us. Those that like stability and those who like the challenge of the new. I think there are more stability worshipers than not and that explains some peoples major reason for buying.
I have owned 3 houses and currently rent. I went sideways or lost money on 2 of the houses when I sold them so the investing angle didn’t work for me although that’s not why I bought in the first place. It’s a home, a place to hang that imaginary hat. I get to call it mine. For people with little power or prestige as we measure it in this country, that’s something. Also the mortgage deduction.
I would like to see equality in our tax system. Home ownership is favored. Being married is favored. Having kids is favored. Owning capital is favored. And what is capital has changed to even more advantage. What would life here look like if this were different? What choices would you have made different?
grumpy realist
As far as I can tell, it’s six of one, half-dozen of the other. Have rented for most of my life, now am owning a condo which am very happy with.
Part of what I’ve noticed is the unavailability of decent rental units in moderately upscale areas. I was in the one “good” apartment complex in my area, then they went through a management change/renovation schtick. Got fed up with the multiple “we’re giving you 24 hrs notice to kick you out for a week, oops, no we aren’t” notifications, walked into the building next door and signed on a condo within a week.
Yes, I pay more monthly for the condo than I did in rent, but that’s because I went for a 10-year mortgage, and yeah, we’ve got silly property taxes. (I figure it’s the price to pay for living in a community where people want to live and raise their kids…..great school system.)
birthmarker
@Nom de Plume: My comment was in reference to your comment that the complex had a lot of expensive vehicles parked in it. Not about your own future plans. I hope you succeed and best of luck with those plans.
Zuzu's Petals
@Remember November:
I bought modestly pre-bubble and refinanced a few years later. The rate was so low (4.375%) that I was able to switch to a 15-year mortgage for only $100/mo more. It’s a good feeling to see that principal go down so much every year.
Alwhite
It used to be possible to make an argument that home ownership stabilized neighborhoods and provided a simple savings plan for the middle-class. But that world is pretty much gone now.
The Masters of Disaster have made all job temporary so almost nobody works for 1 company in 1 place for 40 years (my dad worked for 50 years in one factory, from age 15 to 65). Add to that the manufactured desire for bigger & newer and nobody stays in the same house for long any more.
Brachiator
@Nutella:
This is true, but is not the only consideration. As I mentioned in an earlier post, buying a home is an easy and easily understood way of a person acquiring assets.
I know people who are afraid of buying stocks or mutual funds because the market scares them. But they feel comfortable buying a home.
Even if real estate prices don’t go up tremendously, people who own homes have assets that they can pass along to their children or spouses or longtime companion. Even if the original owner can’t sell the home for a profit, his or her children may be able to do so.
Bill H
I own a home, with a 30-year fixed mortgage of about 35% of the current actual value of the house. The only advantage is that it makes some of my rent tax deductable, but I feel a bit guilty about that, because it should not be.
A boat is “a hole in the water into which the owner throws money.” A house is the same thing on dry land.
artem1s
UR an idiot. period. I am both a homeowner and landlord. purchasing a 2 flat meant I had instant credit, equity and cash flow. Mind you the rental income has paid most of the mortgage for most of the life of the loan. can all of you non-homeowners tap into $25K of cash flow any time you want? I can. Who cares if the property goes underwater? It’s already paid for itself once already with the rental income. That includes most of the renovations. Yes, I still owe money but those loans pretty much paid for a major career change that doubled my income overnight.
And on top of that, any time I borrow money I’m almost guaranteed to get the bottom basement lending rate. 1.5% renovation loan, 2.99% equity line. 6% car loan. Go ahead some time and total up what interest rates are costing when you have to borrow at 24%. That’s the downside of renting. You all have been duped into believing owning makes you inflexible. What really limits your flexibility is not having any cash flow during a crisis. If I have to move for a job, I rent out the bottom unit and I’m making more than the mortgage costs me, even if I have to pay a management company until I can sell.
Granted I bought a house that costs me LESS than renting would have cost. There is NO downside. The problem with the recent bubble was Countrywide talking people into borrowing twice what they paid in rent monthly, not less.
FYI, the low income incentive loans accounted for about $70M of the foreclosures. The bulk of it was high end development investments that were rolled over and over with no actual improvement to the property. The investors were never going to live in those properties. Greenspan is a royal shitheel to try and blame the bursting housing bubble on poor people having the audacity to own their own homes. Eliminating those programs will do EXACTLY NOTHING to prevent the real estate market from blowing up again. In fact it will probably exacerbate the problem because it only encourages sprawl and over-investing in vacation property when the market is over saturated in new housing starts to begin with. Want to prevent another housing bubble? Quit basing economic measures on NEW housing starts. Base it instead on renovation permits for existing housing.
Smart young people are flocking to the inner cities and buying up foreclosures for pennies, paying cash in full and eliminating that monthly payment altogether. Maybe they have to sink a few grand into it but think of the cash flow they are freeing up for other investment and savings. One friend I have paid $7K for her 2 flat, went from paying $500/month for a crappy apartment with a crazy landlord to paying a couple hundred a year in property taxes. She needs to put maybe $10-15K into it and the downstairs apartment will be bringing in at least what she was paying in rent before.
OK, this model doesn’t work for NYC or LA but for most of the country it does. I know because that’s what you did right out of grad school in the 80’s if you could possibly swing it. That is, until Bush I crashed the S&L’s. Blamed that one on poor people too, then got them to move all of their discretionary spending to paying credit card interest and debit card fees.
This is what you all don’t get. manage your money, invest your rent in something, don’t make your landlord rich throwing it away on his boat payment. For sure don’t make the next member of the Bush family rich by mismanaging your debt.
burnspbesq
@Ned R.:
The bat-guano crazy price of housing has essentially pushed the middle class out of Orange County. A generation ago, if you made the equivalent of $50K in today’s dollars, you could buy a house in Fountain Valley or Tustin or someplace like that. Now, if you’re lucky, you share the rent on a two-bedroom condo in Garden Grove or Anaheim. Otherwise, you commute from some godforsaken hellhole in the Inland Empire.
And equity’s a great thing, but it’s illiquid as hell. My next-door-neighbor was a machinist in the aerospace industry. He bought his house from the builder in 1967 for about $70K, and it’s paid off, and it’s appreciated at least 8X over 43 years, but if he sells, where does he go?
birthmarker
I’d go on a nice vacation with my half million dollars while I pondered the problem.
ksmiami
John – I think the big disconnect is this: If homeownership is a stated national goal, then policies that prevent real estate from say APPRECIATING >30% per year should probably have been in place. In other words, it should be a highly regulated part of the economy, not a casino. And we need homeowners and renters and low-income housing to create a stable market. Go too far in any direction and there will be some type of imbalance or crash. Greenspan is heavily to blame for not addressing the train wreck while it was occurring considering how big real estate is as a sector of the economy. I also think suburban America is not a sustainable model if we are looking at a future of limited energy and water resources, but that is a different post.
eric k
I think the problem is that outside of a few really expensive areas (NY City, LA, Bay Area, etc) there really isn’t a practical rental market for middle class families. All of the zoning, regulations and so on are designed around the idea that middle class people with kids own homes and only the poor or childless rent.
Redoing the way hundreds of metro areas are set-up to create viable rental options is something the Feds can’t do, so the only real option they have is to keep propping up ownership.
Tsulagi
@toujoursdan:
Depends how you define “long.” Don’t think that’s a safe assumption at all.
I have a rental house that was built in 1900. When buying it, the title search report provided some interesting history. When it was resold, how much, and other history.
It was built in 1900 and sold for $900. At the time in what was considered the far, far-out suburbs. About a 10-15 minute drive now on city streets to a major downtown work area. So this house has stood through a number of boom and bust financial cycles including the Great Depression. Even after the tax assessor recently gave it a 20% hit in valuation (thank you) now in the Great Recession, it’s still valued at over $400k.
Given they aren’t making any more land, and by the lowest projections the U.S. is expected to add at least another 100 million in population by 2050, long term a house could still be a decent investment or at least a forced savings account. Shouldn’t be your only investment, though.
Thomas
I have just recently been able to accept a new job in a new city and leave behind my old job. The decision to accept the new job was made possible, largely, because I rent. When you rent, once your lease is up its 30 days notice and you’re out of there. I think this sort of flexibility and social mobility is just as good an argument for as any of the threadbare arguments for home ownership.
Brachiator
@burnspbesq:
This is a great example. I don’t know the housing markets in other areas are as crazy as in Southern California. The middle class gets squeezed out of some markets, and the upscale folks do little to allow moderate price housing to be built. Weren’t there stories about how teachers and cops couldn’t afford to live in some of the upscale communities in which they worked, and the upscale homeowners saying “Too bad.”
Also, in Anaheim, you had substandard housing being rented to lower income tenants, and weekly motels popping up, ironically enough near Disneyland.
The one good thing, I guess, is that in some areas both rents and housing prices are coming down.
les
I gotta say, because it’s something of a pet peeve, that I don’t get the notion that renters are punished by homeowner “breaks.” The biggest one that seems misunderstood is the mortgage interest deduction; guess what, the owner of rental property gets to deduct his/her mortgage interest! And therefore rents are lower than they would otherwise be, leaving more money in the renters’ pockets. Purely in terms of housing costs, repeal of the mortgage interest deduction punishes owners (which says nothing about what we want to encourage politically, etc.) Similarly, both homeowners and rental property owners deduct property taxes. Rental owners get to deduct maintenance to, and depreciate their capital costs; but renters, if markets are sane, are paying some profit to the owner, so don’t get the full break for all of that.
In a sane world, ownership v. rental costs shouldn’t be that different for equivalent properties. There’s differences–there ain’t no 30 yr. mtg. in the commercial world, for example. World hasn’t been sane for a while; between feeding a financial market gone mad, and encouraging people to withdraw 120% of the “equity” in their homes, it was stupid. But that’s not a function of ownership v. rental; and if you think the same shenanigans weren’t going on in commercial real estate, think again; that shit storm ain’t even rolling yet.
Nutella
@Daddy-O:
I am amazed to hear someone still saying this.
There are a lot of people in Detroit, for example, who have reason to disagree with you on this.
Over the long run, all other things being equal, real estate is going to become more valuable. But the long run can be very long and other things (like the neighborhood and the local economy) can be very unequal so buying a house in many cases is a money loser. Even if on the average over a long period of time buying a house is a good thing, recommending it to everyone in every situation and every location with ‘you will not ever lose money’ is wrong and dangerous.
DPirate
Yes, it is overly subsidized. Hell, any subsidy may be too much, but especially the tax break is unfair not only to renters but to people who pay off their loans, and has a detrimental effect upon everyone but those currently in a mortgage but effectively driving up the cost of a home. Since people can afford a higher mortgage due to the subsidies, the prices adjust upwards. IMO, houses are still over-priced.
I get why one would want to own, however. Yes, you can move when you like if you rent. You can also be moved according to the desires of your landlord. I suppose you could negotiate a 50 year lease, but that just negates the benefit of being able to move? Your landlord also has rights regarding your behavior in his property, which might not amount to much for a decent person, but surely there is some psychological benefit to being the “master of your domain” or “king of your castle”.
The main reason to own, of course, is as an investment. This was hammered into me as a little kid, and I would guess most other children of those who aspired towards middle class or better. Generally speaking, it is a very good investment. Likely, the best investment one can make, even given the too-high pricetags. Why pay rent when you can accrue equity?
Now, for the conspiracy theory: I do not doubt that many people wish to do away with home subsidies. I think in the long run it is a good idea. Now is not the time, however. A great many people have lost a lot of money due to our current economic troubles, so right off the bat it is probably a bad idea to mess with things that enable them to recover. I will question those who jump on this bandwagon as to their motives. Reducing subsidies will drive prices lower and cause many more homes to be relinquished to the bank. These can be snapped up on the cheap by those with ready cash. It would be a windfall for them. This is how companies(?) like Farmer Joe (I know that’s not the name but I cannot recall it right now – it is Farmer’s something, I think, one of the largest landholders in the country for a long time, based I believe in Florida, which bought up abandoned property around the time of the great depression) got so rich. It is a question of what we want: for people to get what they want, or for rich people to get richer.
The Other Chuck
I only rent from big corporate landlords with professional property management companies. I’ve never had a surly landlord wait on fixing the plumbing, because I call the management desk to put in a service call. Hell, if I use the magic word “leak”, they fall over themselves fixing it because leaks cause huge amounts of damage to the rest of the property if they’re not fixed.
It’s one situation where I’d really rather deal with a faceless corporation, because face it, Mom and Pop are total asshole slumlords at least half of the time.
les
@DPirate:
You really gotta explain this to me; if anything renters get the biggest benefit, because a commercial property owner will regularly refinance, keeping his (deductible) interest higher, while homeowners (in a non-financial fairyland driven world) will tend to pay less interest over time. And if your loan is paid off, you don’t pay interest. While it is a benefit, the long term effect of paying a dollar to save 40 cents really isn’t that attractive.
DPirate
@les: Possibly, and only possibly, are rents lowered due to the owner recieving a deduction. If all landlords offer the rebate, then rental prices are lowered across the board. If only some do, then some people get a brweak and other’s do not. If none do, then it is money in the pocket of the owner. Let’s not forget that rental property is a business designed for profit. There is overhead additional to that which a home-owner faces, and which must come out of the pocket of the renter. It is not an even field.
Additionally, there can be (and are) housing shortages which can drive up the cost of rentals (as well as homes). The problem with that is the fact that shelter is a basic necessity. People are forced by the biology to obtain it somehow.
My honest opinion is that real estate out to be a public utility. Do away with income tax and just charge rents for land use. But that’s another story.
More to Les: If it can be demonstrated that the cost of renting equals out with the costs/benefits of owning, then I’m wrong about that, obviously, and I may be. You would have to find, for instance, the owner’s equity is made up by the renter’s lowered rent, and given the profit margin to the landlord, I doubt it can be shown.
les
@DPirate:
I get market forces. My question is, how is the homeowner mortgage deduction unfair to renters? The fact that a rental owner may not pass the savings along isn’t really an answer; and in fact, rental property wouldn’t survive in the scenario you draw, because ownership would be much cheaper. Yet, most markets, that’s not the case.
Case is, we subsidize all housing. We don’t have to allow deduction for interest on commercial loans, either–nor depreciation, nor deduction of maintenance costs, etc. It’s not cheaper to own, generally speaking, on current terms. The suggestion seems to be that, comparatively speaking, we should punish/discourage ownership.
Boots
I dunno. I tend to think, despite the insanity in the home market the last few years, that there is still some concrete overall societal benefit to advancing home ownership. Not that I think everyone needs or wants to be a home owner, or that we need to do insanely reckless things to get people there. In general, though, I think it’s something that should be encouraged, and, yes, subsidized. Thus, I am staunchly NOT not in favor of doing away with the tax credit that comes with home ownership.
Zuzu's Petals
@les:
I thought the idea of a renter’s credit (at least here in California) was to make up for the renter not getting the direct break the owner does.
les
@DPirate:
Sorry, got excited and ahead of myself. Why should the owner’s equity be made up by lower rent? In the rental situation, there’s another party–the owner of the rental property. If everything came out even, the renter is transferring the equity part of the equation to the rental owner, in exchange for increased convenience (or whatever else makes him/her prefer to rent.) For example, in much of the Kansas City market, rental owners don’t have much chance for “profit;” to win, they have to count on long term equity build up through paying down the debt, just like individual owners. (Or hope, like so much of the country has through the bubble, some insane short term appreciation.)
The cost to build, own and maintain housing is what it is, and right now individual owners and rental owners have (roughly) comparable cost incentives in terms of what’s deductible-with the advantage to the rental owner in depreciation and deductible maintenance, probably somewhat balanced by higher maintenance and wear costs. Absent conspiracy/monopoly (and I don’t claim there’s none of that), ownership v. renting will be kinda comparable, with equity accruing to owners in both cases.
Jeebus, I can’t believe I’m preaching “the market works” here, bein’ a DFH and all. But housing is a huge market, with loads o’ players; it probably comes close.
les
@Zuzu’s Petals:
I don’t know what a renter’s credit is. If I had to guess, I’d guess a government heavily influenced by developers/commercial property owners, since anything that makes rental cheaper ultimately benefits them. Or, I suppose, something like New York (or Aspen), where property values get to the point that you can’t house the workin’ folk without some kind of subsidy, and the rentiers can’t get their latte in the morning.
kc
I don’t understand why these discussions always turn into heated arguments between one group of people saying “Homeowners are stupid chumps!” and another group saying “Renting sucks!”
Atreju
Most of the problems with renting are solved by rent stabilization. My rent cannot be raised unless the LL can demonstrate to the city that his costs have increased. Of course you only get rent stabilization where the upper middle class rents. Chicken and egg problem. It may just be luck but every landlord has been thrilled when I asked to improve the apartment. I insulated my attic (paid for itself in one winter) with the landlords help. He had no objection to getting something for nothing.
Unless you buy way too much house you usually have to be making six figures before you get much more from the mortgage interest deduction than from the standard deduction. The subsidy encourages the upper middle class to buy bigger houses on bigger lots which just makes everyones commute that much longer. (plus more pollution from heating the larger houses)
Anonne
All the reasons stated here in favor of home ownership (ability to make changes, money going to come back, etc.) are still valid without having a tax subsidy for it. Why should eliminating the tax subsidy change those reasons? Your mortgaged PITI doesn’t take into account the tax break returned every April. It’s not as if your ability to pay that amount is going to change if the tax break goes away.
Sloegin
So we have all these tax breaks to encourage home ownership, and US home ownership is about… 67% give or take.
afik, Canada doesn’t have any sort of home ownership tax breaks, and ownership there is about… 67%, give or take.
What’s the point of the tax breaks again?
Zuzu's Petals
@Atreju:
Well, but the standard deduction is the same no matter what your income, correct? So why would you need to be making six figures?
In my case the mortgage interest deduction put me over the top and allowed me to itemize deductions. Before that, none of my charitable contributions and other deductible expenses amounted to over $5700. So now my itemized deductions add up to nearly twice the standard deduction – and as I said earlier, I bought modestly.
Dog is My Co-Pilot
I wouldn’t mind renting, but how many landlords will allow a potential renter who has four dogs? Not many.
greyjoy
I bought a house last year during the tax incentive, and I did so because I knew I would want to stay in the area for several years, and because I also knew that it would be significantly cheaper to buy a house than to rent an apartment of similar (or in my case, much less) square footage.
But I didn’t want to mow a lawn or worry about fixing a roof either, so I deliberately chose to buy a new-construction townhome in a mixed-housing complex (meaning there are several different models as well as single-family homes).
So, I never have to mow or shovel my driveway (a feature which is worth its weight in GOLD in the winter). I have a very nice clubhouse with a gym and an outdoor pool for my use, as well as a few parks and biking trails and so forth. Because my house is new construction, my power bills are insanely cheap ($150 in January, $45 in May, for a 1900 sq ft house), and even if something breaks in the next year, it’s under warranty. (But it’s not likely to break, because it’s new.) And the house is double-soundproofed, so even though I share two walls with my neighbors, you would never know it, even with the windows open! With the windows shut, I may as well be on Mars.
And yes, there’s an HOA, and they have rules, but they’re all common-sense rules. Things like no plastic kiddie pools left out overnight, no music blasting after 10pm that can be heard from outside, no busted cars in the driveway, pick up your dog poop or get a fine. Yes, on an individual level it might seem restrictive, but in a densely populated area, it would be things like this that would make a lot of people miserable very quickly. On the whole, my neighbors seem to agree and cooperate, so it just makes for a much more pleasant living environment for everyone.
Oh, and the $8000 tax credit paid off my car loan 3 years early. Free car with purchase!
So, I guess the moral of the story is that before you buy, think about your housekeeping habits and moving tendencies and buy accordingly. I had a few friends that seemed to make really stupid house-buying choices (one bought a shithole in the hood, one bought a townhouse 50 miles from work, one took out a 3/1 ARM and bought a house with a payment that was more than his GROSS monthly income–yes moron). I used them as object lessons when I was deciding what I did and didn’t want in a house, and in the end it worked out very well for me.
One thing I did consider was that if I did need to get a roommate OR move, that I would buy a house large enough to share comfortably (I did) and which the HOA allowed me to rent out if I must (it does). So I still have options in that regard as well.
DPirate
@les: Just back off work. Hmmm. Well, I’m guessing you know a lot more about this stuff than I do, but I’ve never let that stop me before, lol, so:
I think what I wrote there was dumb. Where I said the lowered rent should equal equity. I don’t think it is all wrong, but way too simple. We are subsidizing home ownership. Which is an investment. The owner gets a place to live and he gets a savings account and he gets less tax. The renter gets a place to live. Were it merely a choice of preference, then fine, all’s fair, maybe, but it isn’t. Some (or many) simply cannot afford to buy and are forced to rent. All well and good still if we assume the subsidy is fully transferred to the renter. There is no way to know, however, and this makes the system inherently unfair to non-owners, since they are sharing the burden (whether equally or not is a tax discussion I guess). Also, there is the case of an extended family living in the same dwelling, or people living with their parents or vice versa, and the working homeless.
I happen to find this unfair, like all subsidies probably.
I think that’s the best I can do atm regarding that.
Ted
Here’s what home ownership means to me: today I found a leaky dishwasher and a leaky window. Probably $1000 or so to have them replaced (and they do need replacement). For someone who is handy (can drywall, fix plumbing, etc) a house makes sense. For anyone else you’re going to get killed on repairs/maintenance.
blogreeder
@Zuzu’s Petals:
Wow. Not very charitable are you? Typical liberal. Narcissistic but probably whines about everyone else not helping poor people to feign compassion. Meaning of course black people but not in the racists way. No, of course not. All blacks are poor; every liberal knows that. And by the way I’ve paid off my house. John is right that it makes more sense to own a house if you have a family. Space, privacy, kid’s friends coming over; I can’t see having all that in an apartment. I didn’t even want to get a new car when I was in an apartment because I had to park in the alley in back. You’re right about the mortgage making itemized deductions worthwhile. I think when I got down to 5 years to go on the mortgage, I stopped itemizing. I guess because I’m not very charitable myself.
Anon of Ibid
@John Cole: Just because _you_ are renting it doesn’t mean someone else doesn’t own it. I’m looking to buy my first house right now (in California, no less!) and if those tax breaks are removed, I’d be SOL.
I’ve lived in rentals for 15 years and all I can say is it sounds like you have a good landlord. In my house, there are leaks from the roof, no vent in the bathroom and the cheapest carpeting this side of India, but getting my landlord to fix _anything_ is like pulling teeth.
I want to buy a house so I _can_ fix my own problems, make improvements, and gain wealth instead of throwing money at a landlord I dislike.