Time to revise the American dream?
Some people never want to buy a home. The government is rethinking its attitude toward homeownership perks.
A new survey finds that 27% of renters never want to own a home.
While Trulia, the real estate data company that did the survey, sees this as a reason the housing market will continue to be depressed, we don't see it as cause for alarm. Even the federal government is rethinking whether homeownership is right for everyone.
Trulia also found that the percentage of Americans who say ownership is part of their American dream has declined in the last six months, from 77% to 72%. Those renters who want to buy a home say it will be more than two years before they do.
This was how Pete Flint, the CEO of Trulia, interpreted the survey findings:
Large numbers of people delaying their plans to buy a home, or not planning to buy at all, could have an enormous domino delaying effect on economic recovery in the U.S. Renters converting into buyers are crucial to turning around the housing slump, but the current economic crisis is causing people to become very hesitant to get off the fence and buy a home.
The government needs to focus more on job creation and job security, as well as stemming the foreclosure hemorrhage. Once that happens, the American public will once again have enough confidence in the real estate market and the economy, at large, to resume purchasing homes.
The rate of homeownership in the United States has declined from a high of 69.4% in 2004 to 66.9%. Industry experts told USA Today they expect the rate to keep falling, perhaps below the previous low of 61.9% in 1961.
John Burns, CEO of John Burns Real Estate Consulting in California, expects the rate to fall to 61.7% in the next two years. He notes that homeownership isn't for everyone:
A large percentage of households are not responsible enough to handle a mortgage payment. Growing homeownership is a great goal but you have to grow the percentage of households that are responsible.
The U.S. government began encouraging homeownership under Herbert Hoover, even before he became president in 1929, because he believed homeowners would be less likely to become communists. Subsequent presidents have backed government policies that reward homeowners, such as the mortgage interest deduction, believing that homeownership leads to more stable neighborhoods.
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Now, those policies are being called into question.
"What we've seen in the last four years is that there really is an underside to homeownership," Raphael Bostic, a senior official in the U.S. Department of Housing and Urban Development, told The Washington Post. That's causing a re-examination of policy, he noted:
In previous eras, we haven't seen people question whether homeownership was the right decision. It was just assumed that's where you want to go. You're not going to hear us say that.
Renting has always been the best choice for some people, including young people starting out and people who don't plan to stay in the same city long. In some cities, renting is much cheaper than buying. This interactive New York Times calculator will help you evaluate the economics in your situation.
With renting, you do throw your money on rent because you never gain ownership of the place you're renting. However, when you own a home, you also throw your money away on other fees and taxes that never go toward your homeownership. For example, you'll pay property taxes, homeowners association dues, condominium fees, and any number of other fees associated to the area your home is in -- none of which go toward the equity in your home.
What do you think? Is it time to revise the American dream? Are there people who should never buy a home? Are you one of them? Do you regret buying a home? Or not buying one? Should the U.S. government rethink its policies of subsidizing homeownership?
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