Given the recent exchanges about renting vs. home ownership on this blog, I found this story from US News & World Report, via Yahoo.com, about renting most interesting. It is entitled Rent, Don't Buy, Your Home.
It does not address the issue of renters not paying property taxes, but it does put forward the argument that home ownership is not necessarily any longer the best course for people to take.
When the housing market slumps—as it has every 10 or 15 years for the past several decades—homeownership becomes little more than renting, from a bank. Without appreciation, buying a $400,000 house—instead of renting the same property for, say, $2,000 a month—can turn into an expensive, potentially money-losing proposition.
So the American Dream (a house on every driveway, a chicken in every house) may not be the sound investment people take it to be, according to this report.
According to Fidelity, if renters save even $300 a month—the difference, say, between their rent and a monthly mortgage payment—that money, invested in stocks growing at only 4 percent, could add up to $114,000 in 20 years. (And that's on top of earnings on a down payment that never had to be made.) "Over long horizons, if you reinvest the savings," Harlow says, "you're probably not going to find that much difference between renting and buying." Saving hasn't proved to be the national forte, of course. But with the bloom off the homeownership rose, it may have to be soon.
This is my favorite part of the piece, from the opening paragraph: Renting is for simpletons who don't like keeping their own money.
This notion, the author is arguing, is one that has been pushed by real estate agents. I have been arguing with people for years, most notably my father, that as a single woman, renting makes the most sense for me (aside from never having anything like a reasonable down payment).
On a related note, I was talking to someone who has lived in Newburyport for a long, long time, and he was telling me he bought his first house for $15,000 - it sold for $600,000. Those kinds of deals, I think, are fading fast.
Although I was talking to someone earlier this evening who told me of a house here (she didn't say where) which keeps dropping in price because the owner will not "stage" the house because she doesn't want to put more money into it.
Apparently you can't sell a house these days without "staging." That means removing all traces of your personality from your home when it's up for sale. According to this woman, most buyers are unable to see beyond your decor to the basics of the house.
All I know is, as soon as my sister took down her original artwork and replaced it with generic prints, etc., her house sold. She and her husband, however, now have an offer in on a house that is full of the owner's junk (and which has been on the market for quite a while).
The house is still not cheap, but it is selling for a lot less than the other homes in the neighborhood.
9 comments:
Seems the story you offered has some downside and mis conceptions to the representation of 'Home Ownership'.
1978, $17,500. for a 'new' home. Give investment of about $170,000 over the years for taxes, maintenance and repayment to the 'landlord' (Bank). 30 years later, even with ups and downs of the market a comparison of funds at 4% in Stocks, Money Market or Mutual Funds (high estimate for todays investment market returns) I still see about a $370,000 return on my investment. Your referenced support 'assumes' purchase with low down and does not support long term investment in community, nor estate planning for investment. Rather short term investments aimed at the mobile and uncommitted resident. This article was written about Real Estate Professionals and trends rather than community committed families. As stated previously, it is much harder to 'walk away' from a real property investment as opposed to the 'midnight move' of one's furniture and clothing, leaving only your opinions behind for the remainder to deal with. Commitment to Community and fairness in tax levies was the topic that sent you searching for an acceptable comparison to tax payer vs renter?
When people like Newburyport so much as to relocate here (as many of us have)and become a member of the community, they assume a responsibility on some level to preform to the present community standards, not change the City to suit their wants or needs.
With the financial troubles this City is seeing and looking for a way to avoid even more debt there is a need for all to shoulder the burden equally. 42% is not a fair assessment. New taxes and income for the City to continue to operate as expected are needed. Or a change in the spending habits of our government will be needed. We know that programs will not be cut in equal fashion so the 'other' alternative is to 'fairly' tax the users equally. Or lessen the gap for property owners? A platformed base tax on income generated property? Owner occupied properties at the lesser scale with progression to income levels of each property? Assessment to usages of services? We all know that 'Downtown' gets more 'attention' of the tax dollar investment than Plum Island or the West End. A tax Zone for each assessed need of Ward or Zone may be the answer. Any way it is distributed, the property owner pays the freight on all City costs over and above the renter's contributions. As for the argument of the renter pays the taxes of the owner, if the house or apartment is 'empty' (no source of income for the owner) the taxes are less than....? A renter who does not pay rent gets evicted, moves on (to a tent at Salisbury State Reservation?). But a property owner who does not pay taxes or the mortgage looses investment value and ownership. Fair? Yup!
Renters are a commodity,just like groceries or shoes. Owners are a necessity.
You take offense? So sorry, but that is your problem! Not ours! You like life on Plum Island? Good! Pay the rent that they are asking. But that does not make you a home owner, with the same rights of ownership that come with ownership. That also does not mean that you are not due the rights of a renter, both in home and community. Just reenumerate at your 'investment levels'. There are differing 'class' of residents in every community. The owners and the renters of all communities are differing 'classes' and no matter how it is looked at the owners are of a higher level due to their 'investment' in property, not their superiority at any 'other' level or longevity. The tax is just one level of responsibility levied.
Pedro.Tdog
Homeowner, property taxpayer, registered voter and community investor.
Same vote as a renter or Post Office Box holder. ;)
I wrote a big long reply and then I erased it all. And then I deleted the second reply.
And yes, I do take offense. Your comments are elitist. This is a Democracy, not a Plantocracy.
Think of me and other renters as a "commodity" or 'second-class' citizens, if you must. That's YOUR problem.
I do understand your statements and emotion at "renters as a 'commodity'", but I fail to understand your insertion of the lead or reference to "second class citizens". No one has taken your 'rights' away except by your own choice to rent vs to own. Your own choice to invest seems to bother you to prejudge your self at my (and all property owners) expense. As I suggested a more fair way of renumeration to the services we all use and enjoy, you chose to place a tag to position your self as a lesser citizen using my achievements against me? Life is not fair and to accuse someone of being an 'elitist' is in a way a form of name tagging when fact gets in the way. Boo Hoo! "I'm not getting a stimulus check because I'm not following the rules"! Listen to your self! We spend way too much time convincing ourselves that we are entitled just because we exist. One works hard to make something of them self and everybody else is deserving of a piece of their labor (or in the case of this subject)it is perfectly OK for property owners to pay more in taxes than renters, but they cannot be recognized as a larger contributer to the over well being of the system?
There is no luck involved. Some of us work two and three jobs to get what we have and to give to our children and our choices of charities. I paid all my taxes (and more using Ari's formula of choice) and received my stimulus check. Maybe I should 'donate' my share to someone less fortunate or even less responsible just because I have enough by your standards?
I really wish you would attempt to understand the 'other' side of this issue. You need to take a less personal position and deal with the facts and not the emotion. Your self pity is not warranted in this case as you have made the choice to be in the position you are in as well as I have made the choice to work hard and gain what I have also. I come from a large (12 siblings)Irish/ American Indian family that did not have much for education or property to start with (talk about your classes all you want). I worked hard for everything I have earned. I choose to donate to charities of my choice and dislike others choosing where I spend my hard to gain profits just like yourself. There comes limits when others make choices that we all need to pay for. Someone needs to speak out about the 'other' unfairness. If you tag this as 'elitist' then thats what you need to do. Sorry this is where you will place your position on this matter. I am also sorry that you are hard pressed for words, this is maybe a first? It is not my intention to prejudge you personally and sincerely hope you can find a way to review your opinion of the statements made here to better understand the many issues of community responsibility of all our citizens and their places in society. If one is able to vote, then they 'Do' have the same 'rights' as any other citizen. If one is not qualified to vote, then they do not have the same say in a democracy. Being fully 'equal' in all things is an imposable dream to enact not only due to 'rights' but to responsibility also. Total fairness is not a reality. No one should use their more fortunate position to undermine another. But it must be recognized that a democracy can be steered to steal(as is the case here) from those who have worked for their own benefits and disperse the same to those who fail to achieve or be charged by their own choices. This is not to be misconstrued as to not supply for the truly in need, just not all 'renters' that are bundled into this category as you have offered up as proof of 'elitist' ways and views in your simple two tier separation theories.
I do not feel that I am better or above any person, nor below and I am sorrowed that you chose to relate that I place myself above others due to my need to save my own earned profits from the 'democratic redistribution system' of leveling the playing field using my funds and not all funds available by enacting the single vote system to disperse all city funds equally (or not so equally as is the case).
As I remember my great grandfather say....
"Nil aon rud gan ceartu le mo shaol, mar sin beidh me ag dul ar aghaigh le dochas mor Eireannach."
For those not Irish Gaelic emersed...
Nothing in my life cannot be fixed, so I'll proceed with great Irish optimism." I believe he acredited this from statements of a Michael Collins.
Wow Pedro Dog sounds dangerous and judgmental as all get out!
Can't help but wonder if he/she is committed to the community in other ways (besides ownership). Say volunteerism?
Thanks, skyeblue - s/he does seem to have an axe to grind.
So to pedro: You seem to willfully misunderstand me. I don't have any feelings of entitlement, and I was making fun of myself about the stimulus check.
You're causing alarm amongst other readers! Let's just agree to disagree, why don't we (since we're never going to agree)?
Would you like to write a guest post? It's free!
Let me first answer skybluelake with a hopeful awakening. Yes, I do (and always did)volunteer in my community and I do presently support many causes that are worth while (in my humble opinion) to the community as a whole. I spent many years in youth programs, with my proudest moments being watching two Scout Eagles to achieve their goals while volunteering as a local Scoutmaster. I also am ashamed at the lack of community service i see presently and have hopes of evert citizen spreforming small acts of kindness with out looking for public aknologements for what should be natural actions. I do what I conceder as my part and have done so for the time I have been a citizen in America. I am just old enough to remember my family chore of sweeping the gutter and keeping the front stoop clean because it was a public embarrasment to call the city to clean our neighborhood.
Alarm can be good Gillian Swart, it actually forces one to think about bigger pictures. I agree to disagree on all of life's challenges and do not hold in disrespect any differing opinions. Your alarmed readers should discuss this and other important issues openly and with conviction to attempt to begin to understand the effects of things like the economy and taxes on every contributer. Open dialog will bring a better understanding to us all.
Thank You for the offer to 'Guest Write', but as you must note, I do altogether too much commenting and writing as it stands at present.
Pedro.Tdog
Hey Pedro, I also remember the days when everyone kept their own part of the street clean and tidy, everyone shoveled their own sidewalk (all of it, not just a path) and also the neighbor's, if they were not able.
I agree with you totally about the open dialog. Your comments have certainly made me think more about such issues as civic responsibility/home ownership.
Thanks for reading and for the comments - I hope you keep doing both. And I do understand where you're coming from (I just don't agree)!
I wish I could buy a property here, I love it so much.
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