From Brian Summerfield on Realtor Magazine’s Blog, “Speaking of Real Estate”:
• Mr. Summerfield reviews the main points in author Barbara Kiviat’s - “Rethinking Homeownership” article and analyzes the large holes in her arguments. Ms. Kiviat’s four main points were:
1. The US government incentivizes homeownership and shouldn’t
2. Homeownership encourages sprawl
3. The social benefits of homeownership are negligible
4. A home is not necessarily a safe investment
• “The institution of homeownership did not cause the housing boom and bust. This was due more to special circumstances in the financial sector than it was to people wanting to own a home. The hazardous mortgage lending environment was largely a product of Wall Street’s efforts to bring in vast amounts of capital for investment without properly assessing risk. Without that, the housing bubble could never have been inflated to begin with.”
• “Perhaps her most compelling argument is that the government distorts demand for homeownership through incentives. To be sure, there is room for honest disagreement about what and how much the government should do in the housing sector. But even here, Kiviat comes up short. First, she says ‘Washington lavishes homeowners with special treatment.’ But compared to whom, exactly? Senior citizens? Manufacturers? The big investment banks that played a central role in the housing bubble? Why target home owners over any of these other groups? Near the end of the article, she vaguely advocates using ‘the levers of the government to help create high-quality jobs.’ Wouldn’t that also be ‘lavishing special treatment’ on American workers, the majority of whom are presumably home owners?”
• “In addition, the rise of suburban and exurban sprawl cannot be explained solely by American’s penchant for single-family houses, which exist in major cities too. (Plus, there’s no shortage of apartment complexes and townhomes in many suburbs.) Infrastructure investments, inexpensive land, and lower cost of living also played a role in development of the outer rings of metropolitan areas.”
• “She [Kiviat] asks if we should ‘realize that both home and car ownership are probably markers of something else, like a stable family life or living in a nice neighborhood?’ She means this question to be rhetorical, but it really isn’t. One could easily turn it around: Shouldn’t we realize that a stable family life or living in a nice neighborhood are probably markers of home and car ownership? Can Kiviat or any other person making a ‘case against homeownership’ provide a common, clear-cut example of a stable family life and a nice neighborhood not being accompanied by large rates of homeownership?”
Summerfield’s whole blog post and the comments that follow can be found at: http://bit.ly/b2aX82
From Vicki Cox Golder: President of the National Association of Realtors: “Letter to the Editor—The Case for Homeownership, Response to TIME Magazine”:
• “There’s a reason owning a home has long-standing government support in this country—because housing helps drive the economy and sustains families and communities, through good times and bad.”
• “Homeownership did not create the foreclosure crisis—Wall Street greed and irresponsible lending practices did…Homeowners have helped revitalize urban centers, bringing amenities and public services for the benefit of all.”
• “The positive impact of homeownership on society has been well documented; extensive research from government agencies, industry, and academia has shown that homeownership contributes to stable communities, helps reduce crime and improves academic achievement.”
• “All of this debate ignores the real issue facing the nation’s economy right now—that many Americans can’t find meaningful work to support their families. Housing cannot recover until jobs return to the economy. A focus on job recovery is what’s needed right now, not misguided attempts to dismantle support for something that has helped sustain this country and its communities through the Great Depression and beyond.”
The whole letter to the Editor of Time is very good and can be viewed at: http://bit.ly/bSOkUP
Article in USA Today by Vicki Cox Golder (published on June 21, 2010): “Opposing view on real estate: It’s still the American Dream”:
• “There’s a reason homeownership is called the American Dream. U.S. history is replete with instances of government support of homeownership, from the Homestead Act during the Civil War to the G.I. Bill after World War II.”
• “There’s no doubt we need to restructure entities such as Fannie Mae and Freddie Mac, and improve government regulations of the mortgage lending industry. However, owning a home has government support in this country because homeownership benefits individuals and families, strengthens our communities and is integral to our nation’s economy.”
• “The Federal Housing Administration, Federal Home Loan Banks, and Fannie Mae were all created during the Great Depression, the worst economic crisis our country ever faced. Lawmakers back then understood the value of homeownership in fostering communities, creating social stability and building wealth over the long term.”
• “Academic studies have shown the positive social benefits of homeownership, including lower juvenile delinquency rates, lower teen pregnancy rates, and higher student achievement among children of homeowners versus that of non-owners of similar socioeconomic backgrounds.”
• “…people who bought within their means with the intent to stay in their homes for more than a few years have the opportunity to build financial stability into the future. A fixed-rate mortgage might last 15 to 30 years; renting is forever.”
The whole article can be found at: http://bit.ly/9M4sbH
Researched, compiled & edited by: Maddy Mitchell - The MITCHELL TEAM at Keller Williams Realty
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