On Monday, I wrote about my impending move from my L.A. apartment to a duplex with a yard. I talked about how I wasn’t crazy about the process of moving (who is?), but I really didn’t mind renting, and, in fact, there were things I liked about it, like the flexibility, simplicity and economy.
To my surprise, I received two negative comments on my post. One was from the publisher of a real estate investors’ magazine, who accused me of being “negative on real estate.” The other expressed her disdain of renting — the exact quote was “Renting sucks” — and doubted that I was sincere when I said I didn’t mind renting.
I’m not negative on real estate per se; as I’ve posted before, I’ve owned six homes. But I’ll tell you what I am negative on: the message that’s been pounded into us since birth that we all should own homes.
I have to give the real estate industry credit. Its relentless marketing campaign is has definitely worked on the American public. Much like the DeBeers diamond people told us for decades that men were losers if they didn’t spend two months’ salary on an engagement ring, and likened the size of a diamond to the depth of a man’s love, the real estate industry has made us believe that everyone should aspire to homeownership, and that renting is throwing money away.
Fellow Redfin blogger Tim Hebb also commented on my post, referencing this New York Times opinion piece that appeared Sunday. Entitled “Home Not-So-Sweet Home.” the column echoed points that I made in my post, such as the unemployment-homeownership connection.
The impetus for the column was President Bush’s 2002 “Homeownership Challenge,” a set of initiatives aimed at increasing homeownership in America.
Oops. While homeownership rose as the housing bubble inflated, temporarily giving Mr. Bush something to boast about, it plunged — especially for African-Americans — when the bubble popped. Today, the percentage of American families owning their own homes is no higher than it was six years ago, and it’s a good bet that by the time Mr. Bush leaves the White House homeownership will be lower than it was when he moved in.
The writer, Paul Krugman, goes on to question why everyone — politicians, policymakers, and citizens – has bought into the notion that homeownership should be everyone’s goal.
The belief that you’re nothing if you don’t own a home is reflected in U.S. policy. Because the I.R.S. lets you deduct mortgage interest from your taxable income but doesn’t let you deduct rent, the federal tax system provides an enormous subsidy to owner-occupied housing. On top of that, government-sponsored enterprises — Fannie Mae, Freddie Mac and the Federal Home Loan Banks — provide cheap financing for home buyers; investors who want to provide rental housing are on their own.
In effect, U.S. policy is based on the premise that everyone should be a homeowner. But here’s the thing: There are some real disadvantages to homeownership.
Some of those disadvantages should be obvious, given what’s happened over the last several years.
Americans, aided by their government, have completely bought into the idea that homeowning is superior to renting. People take on mountains of debt and pay far more in mortgage payments then they’d pay for rent, just to be able to say they’re owners (when, in fact, the only thing they really own is a giant obligation to the bank).
It’s time for Americans to stop worrying about what others think and do what makes sense for their financial and job circumstances. Sometimes homeownership makes sense; other times, renting is the better avenue. Homeowning is not one-size-fits-all.