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How Homeownership Became the Engine of American Inequality

nytimes.com

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Re: How Homeownership Became the Engine of American Inequality

#121

Post by rootusrootus »

arbuge wrote: post #26
anovikov wrote: post #22

Why is it somehow bad that people who are investing their money in the place where they live - thus becoming more responsible citizens than renters who can just pack up and leave - are getting a small bonus for it?

Please provide proof to back up your claim that this makes them "more responsible citizens".

Although the parent poster was being a little inflammatory with the choice of words, there is a bit of an interesting point there. Is there a benefit to society in general from people owning homes instead of renting? High portability can benefit the renter, but a bigger commitment to the neighborhood perhaps benefits the rest of us? Maybe enough to incentivize?

Re: How Homeownership Became the Engine of American Inequality

#122

Post by kudokatz »

Retric wrote: post #63
kcorbitt wrote: post #25

So this article advocates for the removal of the mortgage interest tax deduction, because subsidizing home ownership leads to a larger economic divide between owners and renters. As a renter, I appreciate the intent, and I also appreciate any measure to simplify the tax code. That said, I also see compelling arguments in the deduction's favor. The sad truth is that most Americans are terrible at saving and in very po…

Savings are only part of the equation. Home ownership lowers income mobility by reducing the competitiveness of the labor market and increasing commuting costs. Worse it promotes moving to areas with the maximum possible jobs which destroys smaller towns and city's while creating even worse congestion.

> Home ownership lowers income mobility by reducing the competitiveness of the labor market

Yep. But I still bought anyways, even though houses are what I consider "bad investments" if looking at them in the abstract:

* high transaction costs * illiquid * concentrated * requires maintenance ...

But the calculation was that since the local market and job market for me are amazingly hot right now, it'd transfer my variable costs into fixed costs and be a cash transaction.

Still worth it in some cases.

Re: How Homeownership Became the Engine of American Inequality

#123

Post by rlanday »

homeowner55 wrote: post #50

Just a thought experiment: If home ownership was rare, almost everyone would be renting. The management company in addition to having to pay the bank loan would also have to make a profit. To me that sounds tantamount to another tax on living. Anecdotally, owning in LA is cheaper than renting a comparably nice place. And that's irrespective of tax breaks.

The management company can probably manage and maintain a large number of properties more cheaply per-property than a homeowner can maintain a single property. So even if the management company is turning a profit, that doesn't necessarily mean it's a bad deal for the homeowner. Your argument is basically the same as "no one should ever hire a plumber because the plumber is turning a profit which makes it a bad deal."

Re: How Homeownership Became the Engine of American Inequality

#124

Post by aswanson »

cubano wrote: post #72
aswanson wrote: post #65

Earlier quoted context omitted.

It's a massive bet on a local employment market in an increasingly volatile economy. It's not an unalloyed good incentive.

What about the inevitable growth in telecommuting? Surely owning a home with plenty of space for a semi-isolated home office would be a good thing?

Agreed. If anything, tax incentives should be offered to businesses that allow telecommuting. From a resource/green perpspective as well as providing a more efficient employment environment, it's a 'good' thing.

Re: How Homeownership Became the Engine of American Inequality

#125

Post by acconrad »

Can anyone speak to how taxes are appropriated? Because in all of this talk about MID and perhaps how eliminating it might level the playing field, that only seems to make sense if that money is then appropriated to lower income individuals. I mean the government could simply take that surplus of taxes and shove it into the military for all we know, which in the end doesn't help anyone given our already exorbitant military spending budget.

I also wonder how much of this is personal accountability, and I say this as someone who has voted for and willingly pays additional taxes to provide low income housing opportunities in my community. I mean one of the families that was highlighted was a family of 6 that lives off of $50k/yr with only one parent working. Personally I can't imagine raising one child on $50k/yr in the greater Boston area, let alone 4, and knowingly not trying to have both parents employed. The wife even mentions that the husband was out of work for 8 months...were you not trying to fill in the gap? Even a minimum wage job should cover the cost of day care for their youngest child, who is too young for full-time schooling. I'm really trying to be on the side of some of these folks, but their stories and situations find it hard for me to empathize.

Re: How Homeownership Became the Engine of American Inequality

#126

Post by ianai »

komali2 wrote: post #62
kcorbitt wrote: post #25

So this article advocates for the removal of the mortgage interest tax deduction, because subsidizing home ownership leads to a larger economic divide between owners and renters. As a renter, I appreciate the intent, and I also appreciate any measure to simplify the tax code. That said, I also see compelling arguments in the deduction's favor. The sad truth is that most Americans are terrible at saving and in very po…

Regarding 2: I cannot wait to pay off my debts (scheduled in September!) and start putting money in IRA and 401(k) :) Every time someone asks me if I'm using the 401k I always feel sheepish answering "no... because I have debts with a higher interest rate than I'd get on the return..." Nobody seems to buy it but I've run the math again and again, it's just true.

I just personally disapprove of 401ks. For one, I remember the Great Recession. They bailed out the banks and left the little guy/gal to ruin. Contemporaneously, all those fancy market valuations stink of an economy about to tank, again. I value investing in stocks/bonds, but in current conditions I would not trust a 401k investment broker.

Re: How Homeownership Became the Engine of American Inequality

#127

Post by cbhl »

komali2 wrote: post #62
kcorbitt wrote: post #25

So this article advocates for the removal of the mortgage interest tax deduction, because subsidizing home ownership leads to a larger economic divide between owners and renters. As a renter, I appreciate the intent, and I also appreciate any measure to simplify the tax code. That said, I also see compelling arguments in the deduction's favor. The sad truth is that most Americans are terrible at saving and in very po…

Regarding 2: I cannot wait to pay off my debts (scheduled in September!) and start putting money in IRA and 401(k) :) Every time someone asks me if I'm using the 401k I always feel sheepish answering "no... because I have debts with a higher interest rate than I'd get on the return..." Nobody seems to buy it but I've run the math again and again, it's just true.

Yes, this is the right thing to do.

From /r/personalfinance: https://i.imgur.com/fb7Dtmh.png

Re: How Homeownership Became the Engine of American Inequality

#128

Post by tanderson92 »

rootusrootus wrote: post #121
arbuge wrote: post #26

Earlier quoted context omitted.

Please provide proof to back up your claim that this makes them "more responsible citizens".

Although the parent poster was being a little inflammatory with the choice of words, there is a bit of an interesting point there. Is there a benefit to society in general from people owning homes instead of renting? High portability can benefit the renter, but a bigger commitment to the neighborhood perhaps benefits the rest of us? Maybe enough to incentivize?

High portability might also benefit society. We hear a lot about families in the midwest who are locked into their employment markets which are declining.

Re: How Homeownership Became the Engine of American Inequality

#129

Post by hrxn »

spaceflunky wrote: post #77

This article is incredibly misguided for several reasons... 1.) If you truly are "rich," then you pay for your home in cash. You do not take out a mortgage on your house. Look at a distribution of loan amounts, the vast majority are around $600k. Very few are are >$1M [0]. Home loans are a product for middle-class Americans. 2.) A lot of rich people don't really pay income taxes like middle class people do. This is s…

Absolutely spot on, good comment.

Re: How Homeownership Became the Engine of American Inequality

#130

Post by ianai »

acconrad wrote: post #125

Can anyone speak to how taxes are appropriated? Because in all of this talk about MID and perhaps how eliminating it might level the playing field, that only seems to make sense if that money is then appropriated to lower income individuals. I mean the government could simply take that surplus of taxes and shove it into the military for all we know, which in the end doesn't help anyone given our already exorbitant mi…

Why would you remove something to lower everyone? How about looking for tax incentives for renters? Maybe make rent increases tax deductible. I read this as a tale about "how the property owners are standing on the promise of the working class".
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