Home, sweet deal, home
June 12, 2010, 9:54 am
Posted by Margaret O'Brien Steinfels
Joe Nocera is back in Saturday’s Times and dissects one of American’s Sacred Cows: home ownership.
He begins by citing Sheila Bair, head of the FDIC: “’Sustainable homeownership is a worthy national goal. But it should not be pursued to excess when there are other, equally worthy solutions that help meet the needs of people for whom homeownership may not be the right answer.’ Like, you know, renting.”
http://www.nytimes.com/2010/06/12/business/12nocera.html?ref=business
Aside from all of the subventions home owners get from the government, there is a strong prejudice in the U.S. against renting. Not sure Nocera probes that deeply enough. What have we got against renting?
“What have we got against renting?”
I think that depends a lot on the community context. Here in NYC, we don’t have a whole lot against it since 2/3 of us are renters. Here, an affordable rent-regulated apartment is an asset in its own right; people will stay in an otherwise inconvenient location rather than lose their “good” apartment.
Even here, though, there is a political bias in favor of homeownership. Most of our subsidized housing is rental, but we also subsidize a fair amount of owner-occupied projects. Those ownership projects typically have deeper per unit construction subsidies than the rentals and, oddly, have shorter resale restrictions. Subsidized rentals generally have to stay affordable to the intended populations for 20 years or more; the homeownership projects that I’ve seen are restricted for less than 10 years, sometimes for as little as 2 or 3. Despite the better financial efficiencies of rental housing, though, we still subsidize homeownership projects.
But why the bias against renting? On the policy side, I think there is an assumption that ownership creates more of an investment by residents in their community. If my major (or my only) asset is my house, I am going to be very concerned about the quality of my neighborhood. It will be more important to me that the schools and services are good in my neighborhood, so as not to undermine my investment.
I think we need to be careful about blaming the housing collapse, though, on lower income people who couldn’t afford homes. Many people did buy homes whose payments were more than they could afford, but they were not necessarily lower-income people.
Some states give renters a tax rebate. It’s absurd that New York does not.
San Francisco like NYC has rent control on pre-1979 housing; Renting is still is a better financial deal then ownership as rent for a house ,condo would be less than 50% of the monthly costs of ownership even with the income tax deduction. Renting has been a better deal for a number of years and with no housing price increases in the near future it will remain a better deal. Ca. gives renters a tax rebate too in order to offset the ownership deduction on income taxes.
“What have we got against renting?”
When the troops came home from WWII and the suburbs were created (Levittown, etc) with massive government help and highways were built to get to the suburbs, buying into the “American Dream” was part of the nation’s self-image and mission to show up Communism. Part of the way we sold ourselves was the American lifestyle — space, appliances, ownership. Renters were either too poor to be part of the Great Project, or they were non-conformists, and you know how we felt about those!
Maybe part of the animus against renting is landlords!
Mark, I don’t think a communism show up was any part of the deal…. $50 + dollars down on VA housing didn’t exclude the poor. Longer Transportation to city work was the expense problem. [Margaret; the same percentage of landlords are greedy as writers (-: ]
I wasn’t thinking of greedy. I was thinking of the endless negotiations that go on about repairs, equipment, maintenance, etc. That is a particular issue in places like NYC and perhaps SF where various forms of rent control or rent stabilization are in effect. Listening to friends in such situations sometimes makes me wonder if their great rent deal is worth the frustration and conflict.
Friends in up-scale rentals don’t seem to have those problems; there are maintenance people and replacement policies (of refrigerators, etc.). The rents reflect the services and the attitude. The up-scalers insist it’s still a better economic deal than buying. I would guess that depends on where you live and the quality of the rental housing stock. There are several housing projects in our neighborhood (city-run). They seem to be in pretty good shape and there are always long waiting lists.
We live in a co-op building. We bought it for virtually nothing back when no one in NYC who could afford otherwise wanted to live north of 96th Street. Our decision was brought on by the fallen ceiling in our only bathroom in a rent-controlled apartment for which we paid $125 a month. (The ceiling was fixed several months before we were actually able to move, but the die was cast.) I’ve never done the math, but I find it hard to believe we would have this much room for a rental compared to our maintenance and the building is super-terrific in making repairs.
There are reasons of the human spirit that owning is superior to renting. It is more work to own than to rent, just as it is more work to be married than to be single, or to be a parent than to be childless.
Jim, are you saying owners are spiritually superior to renters?
I don’t know about that, but I like to think I’ll have a couple years shaved off my time in Purgatory for the strife and suffering involved in trying to keep up this damn house.
“Jim, are you saying owners are spiritually superior to renters?”
No :-). I’m saying that there is something in the human spirit that recoils at being under another person’s thumb.
This is why, in large metropolitan areas with decent public transportation, there are a lot of people who still insist on driving to work in their own cars.
“I’m saying that there is something in the human spirit that recoils at being under another person’s thumb.”
And yet people get married every day ….