The Myth of Universal Desirability of Home 'Ownership'

Front Porch chatter is now in session!



On the "Obvious" not Being Real---The Myth of Universal Desirability of Home 'Ownership'

If you have friends or relatives still believing that it's always desirable to 'own' your home (which you never really do,BTW, even if there's no mortgage), you may want them to read Chapter 8 of Glenn Beck's ARGUING WITH IDIOTS, ENTITLED "Owning a Home: Waking Up from the American Dream."

That chapter alone is worth the price and the read. If you have not read the book yourself, you'll find it quite handy, and lots of LOL's. Glenn makes learning fun, unless it's your own ox that's being gored!



A few samples from this chapter...



"...For my entire life, I lived in a world where home ownership was the only acceptable ideal. When I rented, I felt like I had failed. I felt truly successfully only when I 'owned...

"...Should the American dream really be defined by signing a piece of paper that 'indebts' you to a bank for decades?" (If you have no mortgage, great, but there are more considerations to come.)

"That question is one big reason why I've started to rethink many of the arguments in favor of home ownership that I've always taken for granted (my latest home appraisal is another)....idiots like me relied on conventional wisdom instead of common sense...we now find ourselves on the wrong side of what was quite possibly the largest financial bubble of all time...

"The idea that real estate is a great investment seems to be...the Angus steak of sacred cows.(The Kobe beef of sacred cows comes later in this chapter.)

"...From generation to generation...Stories of 'I bought this house for $45,000 and sold it for $250,000!' litter our memories...reinforced with real-life evidence that comes in fancy looking charts and graphs."

Beck then shows a chart of home prices from the 1890's to the 2000's, ADJUSTED FOR INFLATION. He correctly concludes, "The reality is there have only been two good ways to make real money in the housing market over the past century: time the peaks and valleys perfectly, or buy a house during The Great Depression and sell it afterward."

This also happened to me,in 1985, in Spades: Beck continues, "...I sold my house in 2006---right near the peak of the housing bubble. The problem was that then I had no place to live. So I also BOUGHT a house near the absolute peak of the market...the new house that I bought was larger and more expensive than the house I sold. But that's pretty common, right?...But it locks you in a pattern: if you fail, it's likely to be the biggest bet you've ever made in your life...Do you really know enough about the real estate market to play those odds? I now know that I don't." (Neither do I, Mr. Beck)

"Well at least I'm not throwing money away on rent."

"Many people rationalize their purchase by using that argument, but renters actually spend, on average, 26% less on rent than owners do on their mortgage..." If you haven't read the previous blog that illustrates what a tiny, wafer-thin, 4% income tax hike can do to you, it's right below this one. How would spending 26% LESS for 30 years effect YOUR financial situation? Beck continues, "At the height of the bubble...renters were spending an incredible 66% less." Wow.

Beck goes on, "We also tend to forget that there's more to the cost of home ownership than meets the eye. About 7 to 10% of the cost of buying a home goes to closing costs and other tranaction fees. Upkeep on property ranges from 2 to 4 percent per year. Property taxes can approach 2 percent of the home's value each year, and, in states like New York, can exceed 8 percent of the area's median salary. And don't forget interest. When you sign on the dotted line for a 7 percent, 30 year mortgage ona $300,000 house, you've actually decided that home is worth $718,527.60, because that's how much you will have paid for it by the time you stop getting monthly nastygrams from your mortgage company."

(What else could you do with $418,527? Would you merely 'waste it' because you've been told you're incapable by the State 'educational' system, 'news' media, politicians etc. Ironically they are all overseeing the biggest swindle and finacial boondoggle in the history of man.)

"There are downsides to having so much of your wealth locked up in your home." Beck quotes THE ECONOMIST, "'It sucks up disproportionately large amounts of money...in America the equity tied up in houses accounts for 45 percent of the net worth of the average housholder. And it is illiquid. If you need to raise money, you cannot sell a room or two, whereas you can always sell a few shares.'...

"Our perception of homeowner stability comes from the fact that stable people decide to own homes. They're not made stable by their purchase...

"Owning a home can leave you in a position where the local economy dictates your PERSONAL economy..You see, 'when you're living there in Allentown, and they're closing all the factories down,' the appropriate response is not to start 'killing time, filling out forms, and standing in line.' It's a much better idea to pack up and move to Orlando.

"But when you own a home, that decision isn't really yours. It depends on convincing someone you don't know that the town YOU WANT TO LEAVE is a place THEY WANT TO LIVE. Then they have to want it bad enough to buy your house at a price that doesn't put you tens of thousands of dollars in the hole..."

Big government as our benevolent big brother, providing us, in Beck's words, "tax advantages, low interest loans, perks for first-time buyers...pathways to home ownership presented by the government and mortgage companies as no-lose propositions...And most of us lapped it up..."

Once again, we believed the politicians and their larcenous partners, that they were doing this for us. Tee Hee. When the chickens finally came home to roost, who gets the bail-outs? Answer: the real beneficiaries of artificiaally high real estate prices and the propagation of the myth that "you can't lose."

As Glenn says toward the chapter's end, that these hapless borrowers who purchase homes beyond reasonable assessment of the risks and affordability, "...once they're in the house, they have higher utility bills, higher property taxes, and more room to fill with useless junk"

He concludes with, "The American dream is not about owning a HOME, it's about owning your DESTINY...Perhaps idiots like me will someday finally learn that."

I'd like to add that our 'ownership' of our home is not real, even w/o a mortgage. We are at the mercy of the State. Didn't pay our taxes? Build a tool shed in the wrong spot? Can't have chickens? Trying to defend against intruders, vandals, other interlopers who seem to be protected by the State, rather than us, our family and property? Paint your place Candy Apple Red? See who really "owns" our home. No wonder your benevolent Big Brother wants you to "buy"---you're locked in.

Tell us what you think!!