That’s because people with a low standard of living can’t afford to own their homes, which significantly drags down the average. Financial success is (or, at least used to) be required to buy a house, and of course neighborhoods where financially successful live are going to have higher standards of living.
Most of these loans shouldn’t have been given in the first place. Once the speculation market started driving up home prices, mortgage companies interested in only short-term profits started granting loans to people who should have never qualified for the in the first place. This is why so many loans are now defaulting - the vast majority are these high-risk loans (that for the life of me I cannot think of their name. Sub-par maybe?) The recipients of these loans didn’t have the income requirements or show a history of good loan repayment that would make them good risks for a traditional fixed-rate or ARM mortgage.
Close- sub-prime.
But since we do promote home ownership so heavily (both through tax breaks and a societal expectation that owning a home is something grown-ups should do), there are people who probably shouldn’t be buying a home who will want to. The free market is very good at giving people what they want, but it’s not nearly as good at telling people they shouldn’t have some things they want.
If we didn’t promote home ownership as much as we do, some of those people might have made better decisions.
I think the biggest advantage to individual home ownership is better distribution of wealth. Instead of a few wealthy people building homes and apartments, and then using the profits to build more homes and apartments, we have individuals building equity in their own homes. It’s a much more egalitarian system.
Certainly, there are people who keep moving into bigger houses before the old one is paid off, and people taking loans they shouldn’t. There are idiots everywhere. But there are also people who buy a home, pay it off in 15 years, and don’t have to worry about coming up with rent money every month from then on.
As others have mentioned, it also promotes personal freedom and individuality (unless you’re living in one of those ridiculous housing developments that limits what color you can paint, how you can decorate, and what kind of vehicles you can own–but that’s a different subject).
Yeah, I caught that, too. When a cop can sit in his car and pull up ownership info on any vehicle from its license plate in a matter of seconds, why do title searches cost hundreds of dollars and require significant time (the last one I ordered took three days)? Pah.
I’m a home owner. I’m someone for whom home ownership is terribly important. Some people want to travel the world. Some people want to go out to nightclubs. I like to have a great home, at which I like to spend a lot of time.
That said, we can question whether it’s a great idea to promote home ownership through tax breaks.
Is home ownership such a good thing? For that matter, are single-family homes such a good thing? Might not more of our urban sprawl problems be solved by, instead, promoting apartment living? This would lead to a more efficient use of building resources, heating resources, public water/sewer infrastructure. Public transportation would be more effective, making car ownership/use much less necessary, and highway maintenance much less. Commuting would be easier. Downtown business districts would benefit. We wouldn’t waste tons of water, gasoline, and other resources on creating zillions of manicured half-acre lawns. And on and on.
In short, maybe we should not only stop idealizing and subsidizing home ownership, but also stop idealizing and subsidizing single-family homes, with all the suburban problems they encourage.
I’m a homeowner, and I live in the suburbs, and that’s where I chose to live. That said, an emphasis on home ownership must contribute to the suburb-ification of America, and all the inefficiencies that go along with it.
All those things could be accomplished without discouraging home ownership by encouraging condo ownership. Not all homeowners live in single-family homes.
Home ownership does provide the homeowner with some protection against inflation. If the value of a rental property goes up, the landlord will raise rents. If the value of a home goes up, a homeowner with a fixed-rate mortgage still makes the same payments on that mortgage (though their property taxes may go up). That’s good for someone who wants to stay in the neighborhood they moved into ten years ago, when home values were much lower.
Some cities try to provide this same kind of protection to tenants via rent control, but that leads to some problems. The tenants in a rent-controlled apartment have no incentive to leave- they get no money (other than their security deposit returned) when they move, no matter what the property is worth or how many people would like to move into their apartment. A homeowner, on the other hand, gets more money for moving out of a more valuable home, which provides an incentive for homeowners to leave an area with high property values (which presumably means that other people want to move in).
Ownership of any asset provides protection against inflation. It doesn’t necessarily have to be the building you live in.
I agree that if we want to address sprawl and suburbanization concerns without changing the stance on ownership, condos are the way to go.
True. I’m one of those condo-owners.
Hardly. There’s a catch-phrase in the US, that goes like this: “What are the three most important things for a retail business’s success? 1. Location 2. Location 3. Location”
This applies to homes as well. Here in the Dallas area, you could easily pay upwards of half a million dollars for a relatively small, 40-50 year old house on a relatively small lot, if it’s in Lakewood, Highland Park, Kessler Park, and a couple of other places.
A house the same size on the same size lot could be 1/4 the cost, if it’s in some parts of Oak Cliff, South Dallas, etc…
For a more close-to-home comparison, I’m in the process of buying a 38 year old house, and for the same price, I could probably get 200 more square feet, wood floors, marble bathrooms, etc… if I was willing to buy a house in Frisco (I rent from a buddy at the moment), Forney, or any of a dozen other areas where new homes are being built. The problem is, I work downtown, and have little interest in buying a home that’s an hour or more away from work.
But people don’t decide to buy a house versus a condo with the idea “Screw the environment” in mind. They want the yard that goes with the house, they want the relative freedom to personalize the way the house looks, they don’t want some random person with all of their faults (noise, smells, etc) on the other side of the bedroom wall or above the ceiling, and they don’t want a group of other owners/neighbors in control of the maintenance of the building. I’ve owned both condos and homes, and I will never go back to a condo until I am physically able to care for my house and property.
Or we could encourage single-family homes on small lots in neighborhoods where walking to mass transit, shopping, and workplaces is feasible, instead of single-family homes on large lots in neighborhoods where there’s no transit and you can’t walk to anything but other homes. Single-family homes aren’t all created equal.
One way to use taxes to encourage denser housing might be to explicitly include lot area in the calculation of property taxes, rather than having it just go with the assessed value of the home. That would also encourage condo and townhouse ownership, because those types of homes tend to have smaller lots.
Perhaps property tax calculations could also include things like distance to areas zoned for commercial use, to discourage the development of suburbs where you can’t walk to shopping and workplaces. That helps pass the cost of communities like that (in terms of things like pollution and traffic congestion) on to the people who choose to live in those areas.
For one reason, property lines are not always clearly delineated. I’ve never seen two people get into a lawsuit over the correct dimensions of a car.
Plus, the title companies don’t just search out the information–they insure ($) that it is correct, or else have to pay up if something goes wrong down the line (i.e., you couldn’t have legally bought that house land from the person who sold it, and now the rightful owner is demanding you pay them for it).
Sean: You seem to have some opinions on the issue of home ownership, but haven’t said anything related to the OP, yet. Do you think (single-family detached) home ownership, as delightful as it is for the home owner, should be encouraged through tax breaks? Should some other type of housing arrangement be encouraged through tax breaks or some other govt. incentive? Or should there be no breaks for anyone?
I don’t agree. Please explain how purchasing an existing home in the country contributes to sprawl (that’s what I’ve always done).
For that matter, how would I keep my horses in a condo? How about raising my own organic beef? My parent’s condo didn’t have room to park a trailer or build a woodworking shop. Does yours? Where do you put your garden?
Apartment living was pretty unpleasant for me in college and for a few years afterward when I couldn’t afford anything else. I like quiet, which you don’t find in the city. I like darkness at night, which you don’t find around street lights and apartment complexes. I like having my animals. I like privacy (and don’t like nosy neighbors). I like being able to turn up the surround sound when I watch a movie. I like being able to decorate as I wish, park where I wish, add a room or tear out a wall when I wish, and build a fence without getting permission from anyone but the neighbor on the other side of the property line. I like letting my cats and dogs out for a while during the day without worrying about them getting run over (we’re a half mile from the nearest paved road).
Every title search I’ve seen just gives the property line data that’s registered with the county clerk’s office.
A proper database is well within our reach these days: technically and otherwise.
What I think might be one of the best ways to encourage apartment/condo living has little or nothing to do with taxes. Come up with a cheap way to insulate shared walls, floors, and ceilings so people can’t hear their neighbors, and condo and apartment living would probably become much more popular.
A good way to encourage condo ownership through taxes would be to make condominium association fees tax deductible. I know the fact that they are not made a few townhouses we looked at while house hunting less desirable than single-family houses.
Encouraging condo ownership isn’t the same thing as making everybody live in one. We’re talking about tweaking the incentives for home ownership, not a communist revolution.
Most homeowners don’t have horses, raise beef (organic or otherwise) or have trailers or woodworking shops. Obviously, condos aren’t suitable for those who do. But a farm where you can keep horses and cows isn’t suitable for someone who commutes into a city for their job and has no interest in raising farm animals, gardening, or handyman-type projects, either. Nobody’s saying that there’s one type of home that is or should be suitable for everybody.
It increases the demand for houses, which causes more of them to be built further out (since you can’t build new standalone houses anywhere else). Arguing that it doesn’t because the house you bought was already built is like arguing that buying a steak in the supermarket doesn’t contribute to killing animals for food because the cow it came from is already dead. It’s pretty simple economics.
I don’t want to single you out. Several people have pointed out that there are real quality of life considerations to take into account. That’s totally fine. Even if we think that providing an incentive to live in joined housing of some sort (and I think there are already plenty of incentives, like a decreased commute and proximity to urban centers), it’s not like we’re discussing mandated apartment living, any more than the current mortgage deduction requires people to buy houses.
And the house vs. apartment/condo discussion is getting off-course from the original point, which is about renting vs. owning. I rent a house, and a bunch of people in New York own apartments. I’m really less interested in the quality of life considerations that go into deciding what kind of building to live in and more about the impact of people choosing to buy those buildings compared to renting them.
I’ve always enjoyed having the tax break, but have been puzzled why it exists. I would love to live in an area where a denser population allowed for great reliable public transportation - that was the norm in the areas where my grandparents lived when I was a kid - or smaller village-type merchant/residential areas. We have a few of the latter here in southeast Virginia - the Ghent neighborhood in Norfolk and Old Town Portsmouth - but they are the exception.
I do believe that home ownership does lead, for the most part, to better citizens. Of course there are exceptions both ways. I have seen apartments left looking better when the resident moves out, and right now I have two neighbors (who own the houses they live in) that have property looking like Fred Sanford opened up a satellite office there. But generally people who own homes can be counted on increase the value (aesthetic and financial) of their neighborhoods.
So as I see it, a Federal break on home ownership leads to more local tax revenue for infrastructure, schools and emergency services - which benefit all residents. So I’m solidly behind things the way they are now.
Believe me, it’s not always that simple. Maybe if every piece of property were neatly parceled off in perfect squares, and if deeds never contained any errors in property descriptions, and if land didn’t occasionally pass through three generations or more of descendants with no will, and if surveyors were infallible, and if there were never any issues of easements for ingress and egress, and if fraudulent deeds were never recorded, and if creeks never changed course, and if there were no such thing as adverse possession, etc., etc.
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I, also see it as pretty simple economics, but I draw the opposite conclusion. Here’s a house in the country. The owners have moved out. I move in. I’ve vacated one house and occupied another. Ditto the previous owners of my new house. Net change = zero.
I understand that, and I apologize if I came off as snarky or angry. I just get frustrated by blanket statements that people make without understanding that everyone’s situation is different, and I took it out on you.
It’s wearying to hear statements like “cats should never be allowed outside” and “SUVs should be banned” without acknowledging that everyone’s situation is different, and this thread hit me as another one that fails to acknowledge that people live outside of big cities.