Home ownership is overrated

WASHINGTON — It took a week for the technicians to fix the air conditioning unit, but I reminded myself that I had faced similar inconveniences in a house I actually owned. The spastic climate systems that go out during extreme weather — the temperatures were in the 90s when it went down — are no reason to doubt the wisdom of renting.

Still, I’ve had trouble getting used to my status as a tenant. I bought my first house when I turned 30 and reaped a tidy profit when I sold it. I bought another house after that, believing that home ownership was the foundation of stability, respectability and security.

You see, I grew up steeped in the property-owning ethic; I was told repeatedly that rent was money wasted. My parents were not only owners of their primary residence but also landlords. They believed in buying property to build financial security.

And they were right — back then.

But much has changed since my childhood. My mother and father lived in the same house for more than 40 years. Theirs was an era of little mobility — a world where workers were employed for life, where only upper echelon executives relocated frequently, where most American homeowners stayed put for 20 or 30 years. (That’s the premise of the 30-year mortgage.)

But that world is long gone, replaced by an era of global labor, unstable job markets and diminished workplace loyalty. Workers will need to move more frequently to keep up with changing marketplace demands.

So the home mortgage that once represented the foundation for a respectable life may now as easily represent a boulder weighing down the highly skilled laborer who needs to live in Knoxville instead of Cleveland. He’s stuck, unable to move because he can’t sell the house. Ditto the upwardly mobile professional who has a job offer in Houston but is underwater on a mortgage in San Diego.

That’s why it’s no longer good national policy for the federal government to encourage home ownership, as it does through generous tax deductions and other programs. It may take years to reverse that policy, given the popularity of the home mortgage deduction and the power of the lobbies who support it, but it’s time for our elected leaders to acknowledge that it needs to go.

The housing crisis has reminded most of us why it’s not a good idea to use a primary residence as an investment vehicle or cash machine. But the problem with national housing policy goes beyond encouraging would-be homeowners to purchase property they cannot afford.

For decades, housing policy has rested on the premise that the quintessence of the American dream — home ownership — was good for the country. Urban planners, economists and local officials were confident in their belief that owners were better citizens. Home owners not only paid local property taxes but they also maintained their environs better, voted more regularly and participated more frequently in civic causes — or so the thinking went.

But that old model represented a bygone era, when the chance to buy a house in Levittown represented the opportunity to move away from crowded urban tenements. The World War II veterans who benefited from the GI bill, which gave them federally-guaranteed loans, helped start the era of widespread home ownership.

But a younger generation is less likely to marry as early, to stay in the same job or to want a patch of lawn with a barbecue grill. Many young professionals move into well-appointed apartment buildings or complexes that offer a hint of luxury without the weight of a mortgage. They are no less conscientious about their responsibilities for want of a house payment. And when a new opportunity beckons in another city, they can pull up stakes without the anchor of a house.

I haven’t fully recovered from the home-ownership ethic of my childhood; I’m a renter because of an unexpected job relocation. But I now know there is no reason to regard home ownership as the foundation of the American dream.

83 comments Add your comment

BBG

June 17th, 2011
3:59 pm

kitty

June 17th, 2011
4:06 pm

I moved to ATL from CA 14 years ago and sold my house twice in one month when the first borrower fell through. Now I doubt I could sell it at all which would have limited my mobility to my new job and my new life. I have another house here and pray that I don’t get laid off and have to move. Otherwise it becomes a rental. What else can you do?

Bradley G

June 17th, 2011
4:08 pm

So, therefore, your idea is to take away another tax break from those in the middle and upper class because you think the dream of home ownership is a bygone one.

Your answer is higher taxes. Typical…

Joe Schmoe

June 17th, 2011
4:26 pm

Nothing like being a surf to a landlord, or is that the democrat elite way?

mary margeret

June 17th, 2011
4:33 pm

real estate agents? bleah. what do they really do for that commission. put on a tight dress and tell you where to put your sofa. child, please.

Joe Schmoe

June 17th, 2011
4:37 pm

I do agree that real estate agent is one of the most overrated and over paid jobs. Houses need to be easier to sell and buy by the individual.

Not at the Trough

June 17th, 2011
4:39 pm

I happen to love home ownership, because the place is mine. I take full responsibility for it and I keep it well. Today’s young people, and apparently you, take no pride in being able to surround yourself with the colors and things you like, and would prefer someone else have the responsibility for taking care of your air conditioning, etc. I am sure you would also like to lease you car and just toss it back when it fails. Too much of that going on these days. Too little responsibility on the part of people who just want to live the good life, whatever the heck that means.

Kamchak

June 17th, 2011
5:09 pm

Nothing like being a surf to a landlord…

Only if beachfront property is involved.

Joe Schmoe

June 17th, 2011
5:16 pm

Gd spell check… serf!

Kamchak

June 17th, 2011
5:37 pm

Gd spell check… serf!

This got posted next door at JB’s. Hope you find it as funny as I did.

Pablo

June 17th, 2011
5:51 pm

I was a renter before I became a home owner; and given a choice, I will be an owner. I don’t think home ownership is over rated, it just happen that many irresponsible people who had no business getting into a mortgage did, with the help of banks who could then sell the mortgages as an investment, and ultimately leaving the taxpayers holding that bag when the whole thing imploded. Not to mention that government, in its infinite lack of wisdom, decided that banks had to provide loans to people regardless their ability (or lack thereof) to pay them back…

Gerald West

June 17th, 2011
6:03 pm

The first accommodation I owned was a condominium unit in Los Angeles. Since then, I’ve moved around the country and the world as my employment took me. With each move I bought a detached house, hated the maintenance and upkeep, but enjoyed the gains from each sale. Condominium living is the best arrangement by far. Just let a professional manager take care of the gardening and maintenance, and consolidate all the bills into a monthly owners’ fee!

If I could choose, I’d live in a condominium somewhere around downtown or Buckhead. I’d take Marta to the attractions and restaurants to avoid the nuisance and tedium of parking. I would visit my out-of-state family and friends, and they could visit me, conveniently by taking Marta to and from the airport.

Now, in old age, I’m stuck for family reasons on a farm in North Georgia. The living is pleasant, but expensive and burdensome with all the upkeep and maintenance.

So, I pass on the wisdom of 75 years by advising people to give up their houses and get a life as soon as their children are grown. Get a condominium in town!

Ragnar Danneskjöld

June 17th, 2011
6:05 pm

Good evening all. To the extent that our hostess advocates abolition of Federal corporations, such as FNMA, or Federal departments, such as HUD, that sprinkle taxpayer dollars onto real estate developers, she and I are in full agreement.

To the extent that our hostess urges public acceptance of the “new Obamisery” and ratification of the economy-crushing policies of the leftists, such as cap-and-tax and the new consumer financial protection agency, she and I will continue to disagree.

Dave R.

June 17th, 2011
6:09 pm

A friend of mine from Philly once said, “You buy a home, it bleeds you dry”.

tar and feathers party

June 17th, 2011
6:14 pm

So cry me a river. In the ownership society, you put your money down, and you take your chances. Was that not the motto of the Bush II fools? Republicans are all about debt, and in 8 years of Bush II, almost everybody was convinced massive debt was the path to profit. Wrong, losers.

tar and feathers party

June 17th, 2011
6:16 pm

Ownership: the reason why the plantation owner was called Master!

Abe Froman

June 17th, 2011
6:21 pm

tar and feathers…..

so in your opinion, what is the ‘path to profit’? please enlighten us all!

tar and feathers party

June 17th, 2011
6:24 pm

Abe – The path is not in buying over priced properties with borrowed money, that is for sure! How about you don’t borrow to buy assets? No leverage, no forced selling at a loss.

0311/0317 -1811/1801

June 17th, 2011
6:25 pm

Tommy Maddox

June 17th, 2011
6:28 pm

I thought about buying a new Jaguar XKR. I could not afford it.

So, I did not buy it.

Happy Renter

June 17th, 2011
6:39 pm

I have lived in Washington, DC, Ann Arbor, Michigan, Ft. Lauderale, Fl and Atlanta. I have always enjoyed renting because I never wanted to be tied down. And when it was time to go I could. Plus there are many advantages to renting. If something goes wrong I could just pick up the phone and call my landlord.

I now live in a small town in a two bedroom duplex with a large front and back yard. I AM A HAPPY RENTER.

Abe Froman

June 17th, 2011
6:48 pm

tar,

that was actually more of a coherent response than I expected…one that I don’t disagree with.

Eric

June 17th, 2011
6:51 pm

There are not great options to housing either way: new houses are still incredibly expensive and out of reach for most people; fixer-uppers require incredible patience and more money; condos and townhouses are more affordable, but more difficult to see and have those horrific associations soaking up fees; finally renting is a terrible financial investment, but provides the most leisure. Now, maybe more Americans are viewing leisure as the American dream than home ownership. Good article, Ms. Tucker!

tar and feathers party

June 17th, 2011
7:08 pm

Coherence is vastly over rated.

Kamchak

June 17th, 2011
7:58 pm

Republicans are all about debt, and in 8 years of Bush II, almost everybody was convinced massive debt was the path to profit.

8 years?

More like +30. Michael Milken was floating junk bonds back in the 80s.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Commentators say that’s what triggered the stock market meltdown and the freeze on credit. They’ve specifically targeted the mortgage finance giants Fannie Mae and Freddie Mac, which the federal government seized on Sept. 6, contending that lending to poor and minority Americans caused Fannie’s and Freddie’s financial problems.

Federal housing data reveal that the charges aren’t true, and that the private sector, not the government or government-backed companies, was behind the soaring subprime lending at the core of the crisis.

[...]

Between 2004 and 2006, when subprime lending was exploding, Fannie and Freddie went from holding a high of 48 percent of the subprime loans that were sold into the secondary market to holding about 24 percent, according to data from Inside Mortgage Finance, a specialty publication. One reason is that Fannie and Freddie were subject to tougher standards than many of the unregulated players in the private sector who weakened lending standards, most of whom have gone bankrupt or are now in deep trouble.

During those same explosive three years, private investment banks — not Fannie and Freddie — dominated the mortgage loans that were packaged and sold into the secondary mortgage market. In 2005 and 2006, the private sector securitized almost two thirds of all U.S. mortgages, supplanting Fannie and Freddie, according to a number of specialty publications that track this data.

Jack

June 17th, 2011
8:08 pm

I really don’t understand how doing away with the morgage deduction has any connection to an upwardly mobile professional who wants to move to Houston.

Mr Charlie

June 17th, 2011
8:09 pm

Kamschmuck, how about the people who lied on their loan applications about income?

Or the laws that forced banks to make loans in areas even though they know they would not be paid back?

Were bankers greedy? Sure, they took advantage of the greedy home buyers who wanted 4 bedroom and 3 baths on a $40K salary. The greedy to took by the greedier. Who is to blame? The truth? You can’t handle the truth.

Mr Charlie

June 17th, 2011
8:10 pm

In the end, everyone was greedy, the only difference is, some people are just inherently smarter than others.

Mr Charlie

June 17th, 2011
8:15 pm

When the government got involved in making guideline to make loans based on fairness to right wrongs from the past, and not the basic banking principles like down payment, and ability to pay back, it was like letting the horse outta the barn. So the bankers said, screw it, this pop-sickle stand is gonna blow, so I might as well make as much cash as possible before it does. Can you blame them? Again, government interference that made banks load to greedy homeowners wanting homes they had no business buying was ultimately the cause of the meltdown.

Mr Charlie

June 17th, 2011
8:21 pm

I bought my house in 98 on a 30 fixed, when interest rates dropped, instead of selling it and buying a bigger one on an arm, I refinance for 15 years. Now I have 4 years before I own it. Personally, I think home ownership is wonderful.

Kamchak

June 17th, 2011
8:28 pm

Or the laws that forced banks to make loans in areas even though they know they would not be paid back?

Didn’t read the entire article did ya?

Conservative critics also blame the subprime lending mess on the Community Reinvestment Act, a 31-year-old law aimed at freeing credit for underserved neighborhoods.

[...]

What’s more, only commercial banks and thrifts must follow CRA rules. The investment banks don’t, nor did the now-bankrupt non-bank lenders such as New Century Financial Corp. and Ameriquest that underwrote most of the subprime loans.

These private non-bank lenders enjoyed a regulatory gap, allowing them to be regulated by 50 different state banking supervisors instead of the federal government. And mortgage brokers, who also weren’t subject to federal regulation or the CRA, originated most of the subprime loans.

In a speech last March, Janet Yellen, the president of the Federal Reserve Bank of San Francisco, debunked the notion that the push for affordable housing created today’s problems.

“Most of the loans made by depository institutions examined under the CRA have not been higher-priced loans,” she said. “The CRA has increased the volume of responsible lending to low- and moderate-income households.”

In a book on the sub-prime lending collapse published in June 2007, the late Federal Reserve Governor Ed Gramlich wrote that only one-third of all CRA loans had interest rates high enough to be considered sub-prime and that to the pleasant surprise of commercial banks there were low default rates. Banks that participated in CRA lending had found, he wrote, “that this new lending is good business.”

PC This!

June 17th, 2011
8:37 pm

Tucker would be one of those screaming the loudest about making home loans more affordable to expand the american dream, or if you banks won’t loan in certain neighborhoods it’s racist! I’m sure there are plenty of pictures of Jesse and Al marching on these same banks. Now that it’s played out the way those people knew it would, she doesn’t think being able to buy a home is such a great thing. Go figure………………….

sho'nuff

June 17th, 2011
8:46 pm

The housing bubble began under Clinton, took off during Bush. Burst under Bush, but why? A whole lot of money was made in defruading Millions of Americans out of the Homes Now, the Banks who were bailed out first with a blank check gift of Paulson, Benerke, and Geithner. Nobody has gone to jail. Can’t risk that campaign money in no shape, form or matter. Within five years, the middle class would have been sucked dry by the Rich, who in turn will place on the blame of Welfare and Unions workers. Watch and see. Then the filthy rich shall lose all of their money overseas, when it get repratriated by those countries!!!

hsn

June 17th, 2011
9:04 pm

People need to get to the basics… If you HAVEN’T PAID IT OFF YET, OR CAN’T PAY IT OFF, you DON’T OWN IT.

Yes, home ownership is overrated. Indeed!

TrishaDishaWarEagle

June 17th, 2011
9:13 pm

I own two lower end (south dekalb area) rental units I picked up at a tax sale 2 years ago and I can pretty well say without exception to this point, the tenants live like subhuman filth ( a seperate question to be asked is why do katrina evacuees still get rent assistance 6 YEARS after their were flooded out of their pig sty) and I have to change the carpet every time a lease is up. That is a business expense and factored it into the rent. But to say there is no difference in their treatment treatment of “My property” versus how they would treat it if it was “their property”, is laughable.

Ebon

June 17th, 2011
9:13 pm

LOL at the a/c going out. How did you survive A WHOLE WEEK in the summer? Mine went out last summer when it was 100 degrees damn near everyday. Came home and the thermostat said 98 degrees. Yes, the devil was eating dinner with me that night. Thank goodness I have a reliable honest repairman that came out the next day and charged me just $150 for a worn-out part. All in all, I love being a homeowner. Yeah, I have to pay for all repairs, but that’s nothing compares to being able to paint 3 different colors in your front room, planting flowers and bushes on your property, getting a new shiny black fridge for your kitchen or changing out the flooring in your bathrooms.

If you want to rent, that’s fine but home ownership is only good IF YOU CAN AFFORD IT.

Kamchak

June 17th, 2011
9:33 pm

I own two lower end (south dekalb area)…

How ironic.

I reside part-time in the South DeKalb area.

Comfortable, middle class neighborhood where everybody looks after everybody else, homes well kept, youngsters well behaved.

Maybe this is a classic case of a (wo)man hears (or sees) what (s)he wants to see and disregards the rest.

Don't Tread

June 17th, 2011
9:48 pm

Typical liberal reasoning: “I don’t like something, so I think the government should take it away from everybody else”.

OK, I’ll play along…
I don’t have children, so I think the child tax credits should be taken away.
I’m not over 65 or blind, so I think those deductions should be taken away.
I don’t have an electric car, so that tax credit should be taken away.
I don’t have lots of medical bills, so I think that deduction should be taken away.
I didn’t lose money gambling, so I think that deduction should be taken away.

oldguy

June 17th, 2011
10:22 pm

OK,
I rented for 20 years after my divorce. I was and needed to be mobile; but
1. you live on top of others, you put up with noise, cramped living, limited personal freedom (feel like putting on hard rock at 2 AM?
forget it!).
2. limited parking (or none at all). Have a car problem? you can’t work on it yourself, its against rules.
3. NO outside options (perhaps a 6X6 patio).
4. No tax breaks.
5. No storage.
6. NO choice in neighbors (one of my friends moved out, forfitting his deposit and 1 months rent because a family of 8 indians[for India] moved into a 1 bedroom next to him, opened all windows all the time, even in the middle of a Georgia summer, worked second shift so the were up all night talking and cooking, and banged into the walls constantly!).
2. I finally bought a house (100% financing) on a beautiful wooded and fensed lot with a fully wired shop, an in-ground pool, and a two car garage in a quiet neighborhood. I LOVED IT. So did my family when they came to visit. I could easily afford it (payments less that
800$/month). When I retired I moved to a condo near my family.

I can tell you emphatically that even though I like my condo I MISS MY HOUSE and the freedom it provided. And if I wanted to Play THE WHO at 3 AM I could in my house, not here.

oldguy

June 17th, 2011
10:33 pm

I am also quite fortunate (so far) in my condo, I have a quiet retired lady on one side and a quiet retired couple on the other. The next building down just had a “motorcycle group” move in, they come and go (with legal? mufflers) at all hours, they work on their cycles in their open 1 car garage all weekend, and they all drive HUGE pickups that take all of their parking and half of the rest of the legal street parking in the neighborhood. I raelly foel sorry for the retired lady next to them!

Kamchak

June 17th, 2011
11:15 pm

And if I wanted to Play THE WHO at 3 AM I could in my house, not here.

Been there, done that.

How about Eldar plays Monk’s Straight No Chaser.

Paddy O

June 18th, 2011
1:07 am

this article really makes Cynthia look like a moron. If you leave the transient urbanized centers, and investigate the rural areas (about 90% of the geography in Georgia) – you will find this arrangement has NOT changed. Ms. Tucker is also losing tax benefits – and is actually paying the property tax of whoever is renting her her residence. Also, many wise folks either sell their parents’ fully paid off house, move into it, or keep it as a rental for improved cash flow. Owning property will never be a negative for wise people. However, I do NOT think it is national policy for idiot homeowners to use their house as a piggy bank – morons do so. Cynthia even said it her self, she made a good profit off the sale of her first house – how did she reinvest that money? Also, it is quite obvious to me, that owners in general take far better care of their property than rentors do – even of single family detached housing. The self appointed elite of this country are making very illogical, poorly contemplated, and ultimately erroneous pronouncements. The why of which this is happening would be an interesting discussion.

Paddy O

June 18th, 2011
1:25 am

also, cynthia perception of her parents – “little mobility” can also be translated into heavy stability – it was NOT necessary for them to move. unless you make very bad decisions, you should NOT want to move – moving is expensive and a pain in the butt. our current economy, since the demise of the draft, with its need to keep manufacturing job wages low to incent those folks to enlist in the military – has created a very unstable economy. regarding the housing fiasco – bankers are to blame for 85% of it. however, those folks who took out ninja loans, ARM, interest only, intending to either refinance or sell within 5 years with a 50% profit or so, were quite honestly playing with a pin pulled hand grenade. they were not savvy, knowledgeable or wise enough to pull that off. Sadly, both buyer and seller were gaming the system. The seller (banks) were so inept, they did not even see that the game was coming to an end quickly enough to get off the carousel before it locked up. Our bankers were running a gigantic ponzi scheme, one they had even persuaded themselves was a properly profitable endeavor. Sadly for them (and Georgia Banking Committee Chair Murphy), the chckens have come home to roost, and they are a herd full of miffed cluckers.

Paddy O

June 18th, 2011
1:28 am

sadly for Cynthia, a fairly stable career in journalism is now an industry where it is a mistake to enter.

thomascruz44

June 18th, 2011
2:34 am

The first step in determining the worth of a conventional mortgage refinance is to estimate the property value and the borrowers’ equity in the home, use the “123 Mortgage Refinancing” to qualify for refinance

alan

June 18th, 2011
7:29 am

Take a way the mortgage deduction? Its my money not the governments!
Lets take a way public housing section 8 housing etc! The people who use that are using other people’s money!

stepper

June 18th, 2011
7:31 am

This article is written like someone who can’t get a mortgage in the DC area where home values are skyrocketing.

Lil' Barry Bailout

June 18th, 2011
7:35 am

It was never good policy to force banks to lend to irresponsible, lazy folks one paycheck away from joining the parasite class.

guy

June 18th, 2011
7:39 am

CT SOROS,now that you are a renter and a mortgage deduction won’t help you, it’s to hell with the rest of us.CT has a very shallow mind if this is all she can think of to write about.She is always thinking of ways to show her displeasure with life.

Moderate Line

June 18th, 2011
7:45 am

Paddy O

June 18th, 2011
1:07 am
Owning property will never be a negative for wise people
+++
I would agree there have been some unwise actions that resulted in this mess but I also know there are lots of wise people who have been negatively affected by this economy and housing market.

bankers are to blame for 85% of it.
The banker has an adavantage over the borrower when providing a loan. It is business to know when to make a loan and when not to make a loan. When a banks they can determine how much risk they take on vs how much the borrower takes own. In the case of an 0% down load they take on all the risk.