Tuesday, September 21, 2010

Home Ownership Gets a Bum Rap.

Last week Time magazine has a front page article called "The Case Against Home Ownership". In this article the writer Barbara Kiviat takes to task the pitfalls and negatives of home ownership. Barbara Kiviat is a prolific writer currently at Time, Inc. She also wrote for "Mutual Funds Magazine" and previously for "The Arizona Republic". She earned a Masters in Journalism at Columbia University - Graduate School of Journalism and a BA at John Hopkins University. 

In a through article she takes to task the idea of home ownership has been sold to us and it is harmful to our society. All throughout the last century starting in the early 1900's home ownership was pushed on the American population as part of a way to make society more functional. That it would bring economic and societal stability. But with it also brought the dark side of home ownership. 

The writer states,"The dark side which includes 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 a cult of home ownership may have triggered the financial crisis and led to the 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 recession and accelerating the accompanying slide in stocks that that took the Dow Jones industrial average to a seven-week low. 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."

The writer uses words like "cult" in her description of the way all Americans dream of owning a home. It seems we have all been brainwashed by business and the government. Our love of having our own home and the pride that bestows is a result of a marketing scam. Owning property has been a staple of the American experience throughout our entire history. Our history is replete with examples of the American citizen trying to carve out his piece of this land. But to the writer of the article that dream is a con strewn on us. And we don't even know it.

The writer cites examples of how the government has been involved in this. Starting in the 1800's when land was being sold very cheap or given away so as to foster settlement of the new western states. In the 1900's government set up campaigns to foster home ownership. Even after the Great Depression President Roosevelt created the Federal Housing Authority and later Fannie Mae to get lending on home mortgages started again. We see the campaigns continuing through the Second World War. Even up till the present time when Bill Clinton and George Bush encouraged home purchasing through their administrations policy's and laws. 

I can see how the writer sees the immense help and financial assistance provided by government over the last two centuries as a negative. She seems to believe the government should not be involved in the societal development of home ownership in this country. The undue influence of the government, their legislation and work with private industry was not necessary or wanted according to her. Again I can't agree because I feel that we would have found our own way of buying homes without government help. The government made it easier when times were tough or when economy was slowing. 

Later in the article  the writer again states how we were brainwashed into thinking home ownership was a special need for us. Maybe she doesn't experience the deep human need to call ownership of a home and piece of ground an integral part of the our life experience. She also states the "lack of Mobility" the purchase of a home creates. The financial mistake of putting all of ones assets into one thing. She goes on to state how a mortgage is a millstone around our necks. 

With faint praise she does state there are a few pluses that are stated in the article. Owners of homes invest more time and money on upkeep. You can do your own repairs and also it affords you to indulge you gardening hobby. But there seem to be even more negatives of home ownership like detached homes, as opposed to apartments, use 49% more energy. Which leads to the increased use of oil. The brainwashed citizens are again manipulated to feel they have to move out of the cities because they dirty and crime ridden. But now are a very pleasant place to live. It's also unfair that home owners get tax breaks and renters do not. This is unfair.

I have really enjoyed reading this article because it is very well written. I must admit Barbara Kiviat is an excellent writer. She obviously is highly educated and skilled in her craft. Her point of view is unique to say the least and I will read more of her articles soon. Yet I find her conclusions all wrong. She is a product of the current culture idiom of blame everyone but yourself when you screw up. 

In the book there is a deep slant against home ownership. The arguments against it just don't hold water. Trying to blame the government for pushing the idea of home ownership is wrong. Most Americans given the choice to own or rent, would probably own. To blame the high cost of ownership to renting is ludicrous. Of course it costs more to own. Repairs, taxes, insurance, mortgages, etc. make it more expensive. Rent if you want to save money, but your home is not yours. It belongs to someone else. And that's the big difference. Its like the difference between marriage and dating. You have a bond between your house you own and yourself. As you do your spouse and you. 

Its sad to blame the government, the banks, lenders and all financial institutions for making those poor people sign up for those mortgages. I say it was the personal responsibility of the borrower to know if they were able to replay the money they borrowed. Ultimately, the owner is responsible for his actions and the resulting failure or success of their decision. Why not bring back personal responsibility and repercussions for our actions. 

Home ownership is part of the American Dream and human experience. Its in our DNA to crave our own hearth and home. And when you do, be sure your able to pay for it.

1 comment:

  1. The equilibrium in the home ownership market market seems to be somewhere around 60%. When government tries to juice the number higher by lowering lending standards or through other means, we get in trouble in we are now. That doesn't mean that home ownership is bad or a think of the past, it just means that 40% that should rent instead of own need to stay renting and not overextend themselves buying homes they can't afford.


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