Krugman: Level the playing field for renters and landlords

[Doctor_J]

In effect, U.S. policy is based on the premise that everyone should be a homeowner. But here’s the thing: There are some real disadvantages to homeownership.

First of all, there’s the financial risk. Although it’s rarely put this way, borrowing to buy a home is like buying stocks on margin: if the market value of the house falls, the buyer can easily lose his or her entire stake.

...

Owning a home also ties workers down. Even in the best of times, the costs and hassle of selling one home and buying another — one estimate put the average cost of a house move at more than $60,000 — tend to make workers reluctant to go where the jobs are.

...

Finally, there’s the cost of commuting. Buying a home usually though not always means buying a single-family house in the suburbs, often a long way out, where land is cheap. In an age of $4 gas and concerns about climate change, that’s an increasingly problematic choice.

There are, of course, advantages to homeownership — and yes, my wife and I do own our home. But homeownership isn’t for everyone. In fact, given the way U.S. policy favors owning over renting, you can make a good case that America already has too many homeowners.



http://www.nytimes.com/2008/06/23/opinion/23krugman.html?_r=1&oref=slogin

[Cronus Protagonist]

1. *sigh* I remember when gas was only $4.00 a gallon

It's 5 bucks in Los Angeles, give or take a nickel or two.

[enlightenment]

2. Way to go, Paul!!

As a life-long renter who has NO desire to buy into the American Dream, I truly appreciate this article. Thank you for posting the link!

O.K., I know how some people will respond: anyone who questions the ideal of homeownership must want the population “confined to Soviet-style concrete-block high-rises” (as a Bloomberg columnist recently put it). Um, no. All I’m suggesting is that we drop the obsession with ownership, and try to level the playing field that, at the moment, is hugely tilted against renting.

And while we’re at it, let’s try to open our minds to the possibility that those who choose to rent rather than buy can still share in the American dream — and still have a stake in the nation’s future.

[Trillo]

3. I think Krugman's assertion of the value of mobility is probably in error.

We rented (edited to add "a single place") for 15 years and rent increased from about $600 a month to $1300 a month. It seemed that every time we got a pay raise, the rent was increased. Once talking to the landlord, he claimed other landlords watched military pay raise statistics and when they got a pay raise, these landlords raised their rents.

So we moved a long way away from that city to buy a house when the rent hit that unaffordable for us $1300 a month number. We'll be paying the mortgage on this place until we're in our 70s. We never had quite enough income to buy when we were younger.

The very odd thing is that we fixed that landlord's house up over the years, so much so that we miss the place now. Besides the neighbors, we loved the yard and the organic rose garden we planted, which, while small, was much like a park. Getting old and buying a fixer upper is no cakewalk. We apparently don't have the energy and stamina and physique to do it again, and there isn't enough money to hire others to do it. So who the hell cares if we own, we can't even go into our back yard to relax, and I moved so far away from my network of friends who'd toss me bones for 'self-employment' work, that there's much less income now.

My business philosophy was apparently misguided, I believed in cultivating long term relationships of trust. But my long term strategy was undermined by rising property values, and now I'm around a bunch of people who don't know me, and I don't know many of them, and that's just the way it is. Instead, it appears I'd have been better off going for the fast buck, playing fast and loose with truth, and not giving a damn if the customer wasn't happy. Lying cheating and stealing, and not getting caught, seems the way the big boys do it.

I wish I was still "tied down" with that local network of friends who trusted me and I them. So I take issue with Krugman's assertion that "Owning a home also ties workers down", as if mobility were such a great thing. Perhaps mobility is great if you're PhD, but for some others, staying where people know you and help support you is everything.

If you can't buy a house when you're young and vigorous, buying a home ain't such a great thing, though it may help to fix your monthly costs for shelter. It may not ever "feel" like your home, and you may be too old and decrepit to make it so.

[noiretextatique]

4. many people are stuck here in northern california

even if they wanted to sell and move elsewhere, it's a buyer's market now and sellers aren't getting the values they were getting just a year ago. my sister moved to alabama from los angles for a promotion two years ago. she thought her house would sell quickly, but after a year on the market, she decided to rent it out. five years ago, her house would have sold for top dollar in a day or so.