Someone is saying it out loud!
The shocking truth: not everyone should own a house.
Robert Samuelson, in the Washington Post.
Unfortunately, we let a sensible goal become a foolish fetish. Not everyone can become a homeowner. Some are too young and footloose; some are too old and dependent; some are too poor or irresponsible. Some don’t want a home. Even with these gaps, homeownership is virtually universal among the middle-aged middle class: almost three-quarters of Americans ages 45 to 54 and four-fifths ages 55 to 64.
Government subsidizes homeownership in two ways: through tax and spending policies and through credit markets. Tax breaks for homeowners (mainly the deductions for mortgage interest and property taxes, plus preferential treatment of capital gains on homes) exceeded $120 billion in 2009, reports the Congressional Budget Office. These benefits go heavily to higher-income borrowers, who are encouraged to buy bigger and more expensive homes that generate larger tax savings. This is both unfair and unnecessary. By contrast, government subsidies for lower-income renters are skimpier, totaling about 25 percent of the support for homeowners.
Let’s hear it for Mr. Samuelson. I never did understand why people with far lower incomes than mine were expected to subsidize my mortgage (you bet I claimed the interest deduction) or why I am expected to subsidize someone’s McMansion.
Overall, idea that owner occupancy is always a good thing just doesn’t make sense. Anyone who has ever walked into a crap house poorly maintained by owner-occupants who clearly have no idea about what they are doing can tell you that home ownership can be a very, very bad idea.
“$120 billion in 2009.” Wow, and you never hear anyone talking about this. Thanks for the info.
I don’t recall anyone ever saying *everyone* should own a home, condo, etc. Bad lenders tried to push easy credit on anyone who walked in the door during the height of the housing boom, which was blatantly obvious as a bubble that would burst badly. The press and politicians went along with the swindle, actively encouraging it. Now they want “homeownership” to take the blame? That’s idiotic. Running into the arms of a rentier economy is not the answer, except for the ultra-rich who will always be defined by ownership of income-generating and high value assets like real estate. I can;t imagine what would make them happier than a populace of peons that wants to pay out its diminished and frozen wages.
A $120 Billion subsidy is a drop in the bucket, but it should go more to supporting and increasing middle income owners. Another need is quality rental options for the types of people who look to buying a home–mainly people with children–because renting simply isn’t an option or attractive. But that isn’t going to happen. Landlording is a largely unregulated industry that attracts the dumbest and most shortsighted greedy bottom feeders who tune into infomercials and “get rich quick” advice books.
One of the few good points made on this issue by the flaccid cover article in the current issue of TIME is that any rental property in an American city tends to be crap far more than owner-occupied property–especially in residential urban neighborhoods (which makes up most of Milwaukee’s housing) where you have a good base of employed, educated people. It is always the careless, distant landlords and bad tenants in those areas who get the complaints and police calls, very rarely the homeowners. Owner-occupancy really is a very solid indicator of neighborhood health and social capital–crime, blight, and decreasing value follow where homeowners are lacking.
Most people buy a home because it’s cheaper than renting over the period of time they expect to be in an area, especially if they have children, and they can count on getting their money back (if not more) if they can wait for the right time to sell.
In cities like Milwaukee, if residential neighborhoods fall off significantly in homeownership for too long without a recovery, you will see a Detroit-like endgame follow. Crime will skyrocket, and it may be the final coffin nail for MPS. The City and County have no solid source of revenue other than property tax, and they’re already in trouble. They’ll continue to raise taxes and cut services. Jobs and mobile, educate people will continue to move to the burbs or further afield.
When I say “cities” like Milwaukee I mean specifically what you can see if you map ownership against income and education, etc. Or if you just go to Zillow.com and filter out all the single family properties. In unhealthy, quite possibly doomed cities like Milwaukee, there is almost nothing over $100k in large, central swaths that cover a majority of the city and its population. The property there is either junk or the occasional rough diamond in the middle of shell casings and needles. If you look for where the $100,000s, $200,000s and $300,000s are you will see them clustered in thin fringe areas–such as the East Side where values and quality of life have plummeted with the massive increase in rental properties. Do the same thing in Forbes’ pick for lead recovery city and you will see a wide range of prices throughout 4/5ths of the city. Gainfully employed people want to live in those areas, largely as owners. Stability–in terms of order and value–follows.