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The Case Against Homeownership By Barbara Kiviat at Time Magazine | International Residential Real Estate Investors Association
Tuesday January 23rd 2018

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The Case Against Homeownership By Barbara Kiviat at Time Magazine

The following article is telling and somewhat repetitive of the them I’ve been adding here so frequently the last few months.  Interestingly, when I began writing about this in the spring, these stories were absent in the  media.  No one was talking about what was so obvious.  Now, articles about the issues of home ownership are in the news daily.  Much of the time, there are several articles on the topic.  My question is when will the media and the caretakers of our economy realize that home construction is NOT going to be back, already plays a much diminished role in our economy and tinkering with this should be avoided, and that they need to get on to figuring out other ways to drive the economic ship of state?

In this article, perhaps the most interesting point to me that they make is the discussion about how home subsidies hollowed our cities.  I hadn’t really considered the idea from that perspective.  The fact is denser living is more economically efficient.  With the crisis behind us, this is a trend that is likely to remain with us for the long term.  As we come to grips with our debt issues personally and as a state, subsidies are likely to weaken and fall away strengthened by a demographic and therefore voter base is less dependent or driven by them.  This will further accelerate this already developing trend.  Investors must pay special attention to this factor when considering potential buy and hold, new construction, and market opportunities.


Now the Time article:

Homeownership has let us down. For generations, Americans believed that owning a home was an axiomatic good. Our political leaders hammered home the point. Franklin Roosevelt held that a country of homeowners was “unconquerable.” Homeownership could even, in the words of George H.W. Bush’s Secretary of Housing and Urban Development (HUD), Jack Kemp, “save babies, save children, save families and save America.” A house with a front lawn and a picket fence wasn’t just a nice place to live or a risk-free investment; it was a way to transform a nation. No wonder leaders of all political stripes wanted to spend more than $100 billion a year on subsidies and tax breaks to encourage people to buy.

But the dark side of homeownership is now all too apparent: foreclosures and walkaways, neighborhoods plagued by abandoned properties and plummeting home values, a nation in which families have $6 trillion less in housing wealth than they did just three years ago. Indeed, easy lending stimulated by the cult of homeownership may have triggered the financial crisis and led directly to its biggest bailout, that of Fannie Mae and Freddie Mac. Housing remains a drag on the economy. Existing-home sales in July dropped 27% from the prior month, exacerbating fears of a double-dip. And all that is just the obvious tale of a housing bubble and what happened when it popped. The real story is deeper and darker still. (See pictures of Boise’s struggling housing market.)

For the better part of a century, politics, industry and culture aligned to create a fetish of the idea of buying a house. Homeownership has done plenty of good over the decades; it has provided stability to tens of millions of families and anchored a labor-intensive sector of the economy. Yet by idealizing the act of buying a home, we have ignored the downsides. In the bubble years, lending standards slipped dramatically, allowing many Americans to put far too much of their income into paying for their housing. And we ignored longer-term phenomena too. Homeownership contributed to the hollowing out of cities and kept renters out of the best neighborhoods. It fed America’s overuse of energy and oil. It made it more difficult for those who had lost a job to find another. Perhaps worst of all, it helped us become casually self-deceiving: by telling ourselves that homeownership was a pathway to wealth and stable communities and better test scores, we avoided dealing with these formidable issues head-on.

Now, as the U.S. recovers from the biggest housing bust since the Great Depression, it is time to rethink how realistic our expectations of homeownership are — and how much money we want to spend chasing them. As members of both government and industry grapple with re-envisioning Fannie Mae, Freddie Mac and the rest of the housing finance system, many argue that homeownership should not be a goal pursued at all costs.

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