Home Ownership & Middle Class

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1Centrist
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Home Ownership & Middle Class

Postby 1Centrist » 2015 Mar 17 09:01

Is home ownership a bedrock of the middle class? Is it important to our national character (i.e., the "American Dream")? If it is, should government fiscal and monetary policies foster it?

Image
American Dream Home: What's the Middle Class Without a House?
http://www.nbcnews.com/feature/in-plain-sight/american-dream-home-whats-middle-class-without-house-n296346

:hum:

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Wise One
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Re: Home Ownership & Middle Class

Postby Wise One » 2015 Mar 18 10:53

I couldn't find an explanation of the difference between the blue and red curves in the referenced article. Is it there? If not, please explain.

Somewhat tangentially, as a matter of public policy I have long opposed the permanent tax deductibility of home mortgage interest. It had a one-time value in its early days, but that quickly evaporated as home prices rose to re-establish equilibrium, thereby obliterating any net advantage for prospective home purchasers. That's how markets work. Furthermore, it's unfair because it is more advantageous to wealthy people than to poor people.

If we really want to broaden home ownership, tax deductibility of home mortgage interest should be ended. Market prices will decline correspondingly, and a larger base of financially qualified purchasers will be created.

I understand the politics. It's a heavy lift but still a change to strive for. I'd phase out deductibility linearly over a period of ten years to avoid painful market discontinuities.

:coffee:
"If your only tool is a hammer, every problem looks like Donald Trump."

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1Centrist
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Re: Home Ownership & Middle Class

Postby 1Centrist » 2015 Mar 18 11:55

Sorry, Wise One, I used a chart I thought illustrated the situation best, but it was from a different article, which said:
The 65.5% homeownership rate published by the U.S. Census Bureau greatly overstates the real level of homeownership in the country, as the Census Bureau counts all 3.8 million homeowners who are 90+ days delinquent on their mortgage as homeowners. Despite herculean efforts by the Administration to save homeownership for these people, most of them are really just renters in waiting.
http://www.realestateconsulting.com/blog/sean-fergus/homeownership-plunges-lowest-rate-almost-50-years


I don't know if the consulting firm's "real" rate is well determined, and 2012 percentage data were the latest I could find yesterday. Here's a more up-to-date chart illustrating a further decline, but it's too big to render fully here: http://www.millersamuel.com/files/2014/06/matrixHO-6-9-14.jpg

I'm with you on the mortgage interest deduction, including the political heavy lift part. It's just not necessary, bad social engineering, and revenue reducing at a time when we just can't seem to get a grip on our finances.


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