Homeownership Can Bring Out The Worst In You

[M II A II R II K]

Homeownership Can Bring Out The Worst In You


Jul 30, 2021

By Jerusalem Demsas

Read More: https://www.vox.com/the-goods/225979...-housing-local

“Homeowner” is an identity baked into the fabric of America. From political speeches to articles and advertising, Americans are bombarded with messaging valorizing homeownership. In 1995, President Bill Clinton released a 100-point plan to “boost homeownership to an all-time high,” writing that “for millions of America’s working families throughout our history, owning a home has come to symbolize the realization of the American Dream.”

- Homeownership, as it has evolved in the United States, often turns its beneficiaries against progress and change, manifesting as anything from opposing homeless shelters in your neighborhood to blocking transit projects in your region. This identity transcends partisanship, a rarity in our polarized age. You’ll find Democrats and Republicans alike screaming opposition to change and growth, no matter what it costs. To that end, Republicans have supported onerous regulations they would likely scoff at in the abstract, and Democrats have defended a system that has perpetuated the racial and economic segregation they often rail against in theory. What can help explain this phenomenon? — Homeowners across the nation are finding themselves the villains in many stories: opposing a homeless shelter in DC, blocking Covid-19 testing centers in Connecticut and New Jersey, attempting to shut down a homeless shelter in New York, blocking a light rail train in Maryland, and delaying a 100 percent affordable housing project in the Bay Area.

- In a newsletter titled “America’s scarcity mindset,” economist Noah Smith described the political effect of what happens when people are forced to live under scarcity: “Survival values, which supposedly come about because of economic scarcity, include ethnocentrism, xenophobia, fear of disease, and a hunger for authoritarianism. Sounds a lot like Trumpism, but I think you can also see echoes of this in various leftist ideologies and spaces.” He goes on to cite housing politics as the quintessential example of this phenomenon. The most charitable reading of this behavior is that the failure of the United States to provide a social safety net for its residents has forced homeowners to defend the value of their asset however they can. — To hedge against the possibility that changes in the neighborhood could harm the value of their largest asset, some homeowners will use whatever local levers they have available to them to block change in their communities, whether it’s new housing, homeless shelters, transit, or Covid-19 testing centers.

- It’s not that homeowners somehow have an exclusive claim on classism and racism, it’s that the median homeowner is likely to be older and wealthier than the average US resident. Older and wealthier people often have a preference for stability; they’re closer to retirement and more likely to be facing medical needs, as they are later in life. That means this group is predisposed to fear change even more than the average person. And they are overrepresented in our political system. None of this is meant to be an indictment of people who want to become homeowners. But it’s a warning about how it could affect your thinking and politics. Because while there is some rationality to the fears that drive homeowners to oppose growth and progress in their communities, there is also a massive cost. — And the neighborhoods these homeowners are seeking to protect? Perhaps their bet will pay off and when they’re ready to retire, they’ll be sitting on a nest egg. But perhaps instead they will watch their kids grow up and leave, unable to afford rent.

.....

[jmecklenborg]

Originally Posted by M II A II R II K

Homeownership Can Bring Out The Worst In You


Jul 30, 2021

By Jerusalem Demsas

Read More: https://www.vox.com/the-goods/225979...-housing-local

Sour grapes.

People buy a particular home because of the conditions that exist at the time of purchase. Those conditions fit into a larger narrative they anticipate for their own lives and for the neighborhood. People get upset when something comes along that they didn't anticipate that threatens the stability of the neighborhood.

Homeowners assume responsibility not only for the homes they own but the surrounding blocks and the school district. People who don't own homes are free to change neighborhoods or cities without penalty.

[iheartthed]

Originally Posted by jmecklenborg

Homeowners assume responsibility not only for the homes they own but the surrounding blocks and the school district. People who don't own homes are free to change neighborhoods or cities without penalty.

I don't get this line of thought. A homeowner's vote is not worth more than a non-homeowner's vote. Further, you can be a homeowner who does not have the legal right to vote, or a non-homeowner who does have the legal right to vote.

[IrishIllini]

Originally Posted by iheartthed

I don't get this line of thought. A homeowner's vote is not worth more than a non-homeowner's vote. Further, you can be a homeowner who does not have the legal right to vote, or a non-homeowner who does have the legal right to vote.

It's certainly a balance, but mindset doesn't seem totally out of line. I don't support blind NIMBY-ism, but giving special consideration to owners who occupy their homes doesn't seem inherently unjust. Investors are a different story.

[jmecklenborg]

^In my state (Ohio), owner-occupants pay less property tax on a property than do landlords. Technically, the millage rate is the same, but owner-occupants get a "reduction". There is also a mechanism that reduces out-of-pocket increases for senior citizens who are owner-occupants (sort of like California). If you choose to rent out your house and become a landlord, you need to fill out paperwork that registers the house as a rental, which triggers an immediate hike in your property tax payments (the previously mentioned "reduction" disappears).

Getting back to my first post, a lot of the whining from owner-occupants comes from episodic county appraisals and the inevitable property tax hike. In Ohio each property is appraised every three years. These appraisals alternate between an automatic comp sale calculation and an in-person visit from an auditor every sixth year.

The appraisal process is a little mysterious and people always get bent-out-of-shape over it. On one hand, owner-occupants see a significant increase to their monthly bill. On the other, landlords are forced to pass along the expense and so tenants and tenants-rights people do their round of belly-aching.

The thing about property tax payments is that the people who complain the most about them are the upper middle class, who have the option to sell and move to a smaller house, but who never do. That said, the sour grapes renters who write anti-house articles don't seem to understand property tax increases or the unpredictable costs that are all part of owning a house.

[JManc]

Originally Posted by jmecklenborg

^In my state (Ohio), owner-occupants pay less property tax on a property than do landlords. Technically, the millage rate is the same, but owner-occupants get a "reduction". There is also a mechanism that reduces out-of-pocket increases for senior citizens who are owner-occupants (sort of like California). If you choose to rent out your house and become a landlord, you need to fill out paperwork that registers the house as a rental, which triggers an immediate hike in your property tax payments (the previously mentioned "reduction" disappears).

That's because you (as the landlord) are treating your property like a business. We own two homes, one we live in and one we rent out. We get a homestead exemption and the other we have to pay the full tax on plus the insurance is higher.

As a renter, you also have the tax burden rolled up into the rent without any of the benefits of write offs or equity.

[jmecklenborg]

Originally Posted by JManc

As a renter, you also have the tax burden rolled up into the rent without any of the benefits of write offs or equity.

A parent can get their kid in a better school district by renting in said school district without a down payment or commitment of home ownership. There are benefits and drawbacks to either situation.

Many if not most people hardly break even on the sale of their owner-occupied home, so renters aren't all the fools that haughty homeowners like to pretend they are. But to really gain a monetary advantage, the renter has to invest the difference, and most don't.

[Qubert]

Here in NYC, a place where 2/3rds of residents rent and 2/3rds of residents are of color, I hardly see a bastion of forward thinking, pro growth mindsets being brought forth. From blocking any and all development to screaming over "gentrification" to shouting down homeless shelters and the like I hardly think ownership is what's at issue.

As a rare conservative on the board, let me be "that guy": Maybe property rights really *should* matter and let developers build what they damn well please on their own property without Harry and Maude screaming about losing their free parking and how this will affect the sidewalk oak trees.

We don't build new housing because we don't build new housing. Period. Paris, Berlin and Hong Kong all are in the throws of their own housing catastrophes for the same reason and none are a) bastions of homeownership b) in places where social housing isn't a key part of the city's housing fabric (In HK it's 50%) and c) places lacking a decent safety net.

[iheartthed]

Originally Posted by Qubert

Here in NYC, a place where 2/3rds of residents rent and 2/3rds of residents are of color, I hardly see a bastion of forward thinking, pro growth mindsets being brought forth. From blocking any and all development to screaming over "gentrification" to shouting down homeless shelters and the like I hardly think ownership is what's at issue.

As a rare conservative on the board, let me be "that guy": Maybe property rights really *should* matter and let developers build what they damn well please on their own property without Harry and Maude screaming about losing their free parking and how this will affect the sidewalk oak trees.

We don't build new housing because we don't build new housing. Period. Paris, Berlin and Hong Kong all are in the throws of their own housing catastrophes for the same reason and none are a) bastions of homeownership b) in places where social housing isn't a key part of the city's housing fabric (In HK it's 50%) and c) places lacking a decent safety net.

New York isn't Houston, but I would hardly call it "anti-growth". Towers are constantly sprouting up like weeds in NYC.

[Steely Dan]

Originally Posted by jmecklenborg

Many if not most people hardly break even on the sale of their owner-occupied home, so renters aren't all the fools that haughty homeowners like to pretend they are. But to really gain a monetary advantage, the renter has to invest the difference, and most don't.

yeah, outside of the super-hot markets where regular joe's have been made into multi-millionaires through the good fortune of purchasing a standard middle class house 20 years ago that's now worth millions, the main financial advantages for home ownership for most people are the tax breaks and the fact that it eventually becomes a kind of forced saving account as your mortgage payments slowly swing from mostly interest to mostly principal.

if you're really smart and responsible with your money, you can probably do better in the long run by renting.

[Pedestrian]

Public policy in the US at least since WW II has encouraged home ownership because mostly owner-occupied housing is better maintained, more stable and home ownership is been, for a long time, the biggest source of wealth for individuals. Owner-occupied housing is subsidized all sorts of ways from tax deductibility of mortgage interest and property taxes to "homestead exemptions" on those taxes, inflation caps on them (e.g. CA's Prop 13), capital gains tax exemptions on all or much of the appreciation in the value of a primary residence and so on.

Many people use the differential value of homes in which they raised their kids and the smaller ones that suit them in retirement to supplement their retirement income. Without this income, a lot more people would be in poverty or on the edge of it later in life, surviving on Social Security alone.

Because of all these benefits to home ownership, any change in the governmental attitude toward it would be earth-shattering to the national economy and the financial health of millions of individuals. It's a stupid idea.

[Pedestrian]

Originally Posted by Steely Dan

if you're really smart and responsible with your money, you can probably do better in the long run by renting.

Almost no one fits that mold. The tax benefits and inflation protection of hard assets like property are too powerful. The supply/demand quotient of property in a country with an inexorable rise in population and a limited "liebensraum" is hard to beat anywhere else including the stock market where you may have individual spectacular winners but its very hard to average a hand better than real estate with a portfolio comparable in size to the typical house. And in an era of "tax the rich" mentality, the differential between what government does for homeowners and what it tries to take from owners mainly invested in other assets is likely to get worse.

[Crawford]

Originally Posted by Pedestrian

Almost no one fits that mold. The tax benefits and inflation protection of hard assets like property are too powerful. The supply/demand quotient of property in a country with an inexorable rise in population and a limited "liebensraum" is hard to beat anywhere else including the stock market where you may have individual spectacular winners but its very hard to average a hand better than real estate with a portfolio comparable in size to the typical house. And in an era of "tax the rich" mentality, the differential between what government does for homeowners and what it tries to take from owners mainly invested in other assets is likely to get worse.

In the Bay Area, yeah, RE has been an unabashed long-term winning investment strategy. In much of the country, no.

My parents bought their home for around 160k in the 80's, and they might be able to sell it for 550-575k now. That's basically keeping up with inflation, all while paying very high property taxes and utilities (plus high upkeep; it's a vintage house). If they put that money in a Vanguard fund it would be, what, $3-4 million?

And there's nothing wrong with their community. It's affluent, safe, quiet, and with arguably the best public schools in the state. It's probably a nicer community now than back when they bought. Much of it looks like a Midwest version of Burlingame, or any nice Peninsula town. But Michigan has flat population growth, and no restrictions on development, so RE doesn't appreciate, really.

[SFBruin]

I never understood the subsidy for people who own their own home in the US.

It seems like a subsidy either for people wealthy enough to own a home, or for those who have chosen that lifestyle.

[jmecklenborg]

Originally Posted by SFBruin

I never understood the subsidy for people who own their own home in the US.

It seems like a subsidy either for people wealthy enough to own a home, or for those who have chosen that lifestyle.

The mortgage interest deduction is less of a factor today because interest rates are so low that many people (myself included) don't take it because the standard deduction is the better option. It does, however, apply to vacation homes, which is completely ridiculous.

None of this was intentional - the mortgage interest deduction, along with student loan interest deduction - is a relic of a 1910s-era tax law that the wealthy carved for themselves back when the income tax was instituted.

[jmecklenborg]

Originally Posted by Steely Dan

yeah, outside of the super-hot markets where regular joe's have been made into multi-millionaires through the good fortune of purchasing a standard middle class house 20 years ago that's now worth millions, the main financial advantages for home ownership for most people are the tax breaks and the fact that it eventually becomes a kind of forced saving account as your mortgage payments slowly swing from mostly interest to mostly principal.

The ownership of U.S. real estate is dispersed between tens of millions of individuals and legal entities. With the exception of the Southern plantations, land/building ownership in the United States has always been widely disparate, and entirely dissimilar from what existed contemporaneously in Europe.

While the individual homeowner often breaks even, the decentralized ownership of homes is without a doubt one of the defining characteristics of the United States, and a great mediating force.

Following up on my previous post, I forgot to mention the capital gains exemption that exists on the sale of primary residences. I imagine that there would be tremendous pushback against a lifting of that tax break. That said, homeowners, along with the critics of homeownership, tend to ignore the high costs associated with the sale of a home. It's just another example of people focusing on the gross sale of something rather than the net.

[Steely Dan]

Originally Posted by jmecklenborg

That said, homeowners, along with the critics of homeownership, tend to ignore the high costs associated with the sale of a home.

indeed, which is why, if you're not in one of the hot real estate markets, it's not a bad strategy to find yourself a "forever home" and just plant yourself there for decades if you decide to go the home-ownership route.

[jmecklenborg]

Originally Posted by Steely Dan

indeed, which is why, if you're not in one of the hot real estate markets, it's not a bad strategy to find yourself a "forever home" and just plant yourself there for decades if you decide to go the home-owner route.

Yep. I sense that some people move just for something to do. Everyone's heard about some quiet couple in a small house that gave away $10 million nobody knew they had when they died. Well, you could be that story if you don't blow all of your income on furniture and improvements to a house that is much bigger than what you need.

[forward looking]

Especially since Trump made the interest on home mortgages non-deductible.

[NYbyWAYofGA]

Originally Posted by jmecklenborg

Yep. I sense that some people move just for something to do. Everyone's heard about some quiet couple in a small house that gave away $10 million nobody knew they had when they died. Well, you could be that story if you don't blow all of your income on furniture and improvements to a house that is much bigger than what you need.

Well, you certainly can't take with you...