The same problem with ending the death tax, etc. The federal government is over $8 trillion dollars in debt. It needs all of the tax money it can get. Do you have any scientific studies that show the lack of ownership was the cause? I would put my money on the cause in this case be that a group of lower income people were moving in, not the issue of ownership.
How about this renting is a total loss. I own a lot of property put a lot of money into it. I am not sorry I did it.
There are far better places to take care of this. I mean, really, the mortgage deduction is the villain in this story? Repeal the tax cuts first, then tackle the little issues. I think it'd be the exact opposite, actually.
No money down loans are a joke. A very large percentage of homes are bought by speculators, not people who are going to live in the home. God forbid, say there's one destructive terrorist action in a major city. That could mean the real estate goes WAY down in that city, maybe even a huge crash. I find it hard to believe regular Americans can live in New York City, parts of California, or even some parts of the DC area where I live. The prices are unbelievabe-$1/2 million for sh!tty old homes in the DC area. Itemizing things are a bs way to do taxes-the fairest way and simplest way is to tax using a progressive scale. The flat tax idea, but where the richer you are the bigger % you pay. Personally once I have enough $$ in say 5-10 years to afford a major down payment I may move to where I can afford a place, if the housing market doesn't cool off.
The tax cuts will end on their own. And the mortgage interest deduction is in itself a huge problem. It's a huge subsidy for the very people who can best offord to own a house. If you make $30k / year and there's a deduction for ownership there I can live with it. But when you're making $100k / year and able to deduct your interest for something people commonly consider an investment, sorry, it's not needed. The deduction is a subsidy for the mortgage loans. This is just as much of a tax break for upper middle class and the wealthy as any other tax break and it needs to be fixed. If you want to tell me the poor and lower middle class should keep some form of this subsidy, fine. But don't tell me that my friends who have a household income of $150,000 / year need nor deserve to have their $400k house subsidized. Good point. But is it renters that brought the value down? Go around a neighborhood of $400k, $500k homes in a metro where the median is $225k and how many of them are rentals versus resident owners? In that same metro, go around a neighborhood of $200k, $300k homes and what's the number? And at that, how many were built in innner ring suburbs versus ones built in the last 10 years? What I'm saying is that as those homes become less desirable over time and they become more centrally located in the metro (they're in the core city, inner ring suburbs + just have time for properties to change hands over the decades) that all those factors play into the decline in housing values. Look at the worst neighborhood in Minneapolis, North MPLS. Did the housing values drop because people suddenly started renting their houses out? Or did the desirability of the neighborhood decline with time as first the wealthy Jews moved to St. Louis Park and other new edge cities (they were at the time) which then brought in more middle class owners and more rentals (properties changing hands) which then as those people moved out ot St Louis Park and other more desirable suburbs even more properties changes hands (more rentals pop up again) and a lower class of people move in. How many people that make $250k+ / year rent? How about for $100k-250? How about $75k-$100k? And so on down the line? I think that in there is the myth that renters are bad. It's not about renting and owning, it's about class. And as far as which comes first, I would argue that the decline in desirability (note that I'm referring to desire regarding other housing in the area; not necessarily prices) occurs because of a variety of favorts. But that the desirabillity needs to drop enough combined with time to allowed for the number of rental properties to grow enough to play a factor in the neighborhoods valuation.
It's main affect is merely to push up the cost of housing in that allows people to afford to borrow more to make a purchase. As such it is a huge tax subsidy to homeowners in the form of the higher prices they realize when property is sold.
That's almost certainly related though. If people throw all their resources into housing (after all, house prices only go up, right? ) in the expectation of future gains, that is their 'saving'.
Then why is there a deduction in the first place? The government needs the money, right? Let's end it for the fiscal future of America. Or we can cut $8 trillion in programs. Sounds like a better idea to me.
That's actually my main issue. The government is encouraging one type of living arrangment over another and in turn creating an unsustainable nation. See above
Is there anything that studies this to differentiate between how ownership impacts behavior versus income?
Don't know. I only can go anecdotal/observation really. I'll poke around and see if I can find anything interesting...
You don't need to be a scientist to know empirically that owners tend to care more for their property - thus maintaining/increasing value - than renters.
Um... that's crap. Talk to the people in Butte, MT who own a cherry Victorian 2 blocks from downtown that they can't unload for $80k about how much the mortgage deduction is pushing up their property's value. There are WAY more variables determining home prices than the stupid mortgage deduction.
Please support your claim that the mortgage deduction is responsible for an unsustanable "nation." Whatever that means. Because I don't even understand what you mean.
The real culprit of sprawl is that ultimately we Americans can't stand each other and are trying to get as far apart from our neighbors as we can.
http://www.hgtv.com/hgtv/dream_home_tour_2006 I suddenly found myself. In mode to answer. Not bad look'in pad from distortion.
Not a middle class subsidy. With state taxes and the mortgage interest deduction, most who own a home can itemize.
I would love to see your proof that renting and investing the difference would generate you an extra $4 million. I'm guessing you are leaving out the fact that you are not comparing apples to oranges. That is, you are comparing the rental of a 1,000 sq ft apartment to a 2,500 square foot house and then you are not comparing the fact that the house will substantially appreciate. What you should have said is that people lived in smaller houses or apartments, they would have more money to invest. But, as it's been said before, that's a lifestyle choice, not an economic choice. Comparing apples to apples, buying blows the pants off renting.
Is this supposed to be an argument that the deduction doesn't push up property prices? If so, it's a pretty poor one as $80k houses aren't exactly the norm these days given the median for the country as a whole is over $200k. I agree, however, that the benefit from the deduction goes disproportionately to high-price states such as CA. Indeed. However, the deduction undoubtedly adds upward pressure to prices. Notice the squeals of horror from the real estate industry when this fall that commission reporting to Bush on tax reform recomended its abolition. From NAR's website:
I disagree. Right now where I live (Bay Area) renting blows the financial pants off buying a comparative property. I've seen two studies and also have done my own calculations of after-tax costs. They consistently indicate that the cost of renting is slightly under half the after-tax carrying costs (interest, prop. tax, insurance and maintenance or hoa dues) of buying an equivalent property. So the only financial reason to buy at present is expectation of continued significant increases in value of the proiperty. Good luck on that one over the next decade around here: there is no "fact" that the house will substantially appreciate in value as you claim. Having said all that, I do agree that buying is generally a better bet than renting. However, we're at a point where housing has lost almost all relationship to rents and wages in CA. I don't see how this can bode well for future appreciation in values. Until rents/wages catch up to at least some extent, I think renting around here will remain a better financial bet.