Well, the federal government's bi-partisan Deficit Commission's report is coming in. Close to the top of the list of proposals is a suggestion to eliminate (or at least limit) the mortgage interest deduction (MID) available to homeowners. For those who are not familiar with it, the MID is a great benefit helping people looking to own a little bit of God's green earth. We've discussed in the past some of the benefits of homeownership, not only to the individual, but to the community at large. One of those benefits is the ability of homeowners to deduct the amount of interest paid on their mortgage from their income for income tax purposes. simply put (in the interest of full disclosure - I'm no tax expert!), if one earns $60,000 and is in a twenty-percent tax bracket and pays $10,000 in mortgage interest, $2,000 less tax is paid. That's $2,000 that can be spent on other things - food, utilities, home improvement - whatever. That spending injects much-needed revenue into the economy, which in the long term will create even more tax revenue.
Unfortunately, the government's view is not only myopic, it's misguided. Limiting or eliminating the MID will not only hurt those who currently own their homes, but put a damper on those who are considering buying.
It's estimated that every home sold injects around $50,000 into the economy. Right up front the Realtor(R) gets paid; the loan officer and attorneys get paid; and the insurance agent gets paid. The new buyer wants to have work done on the home and hires a contractor (who gets paid), goes to Home Depot or Lowes for supplies; buys new curtains, drapes, and furniture; and hires a mover. At the very least he or she rents a truck and has family and friends help move. Pizza and beer are ordered for all. All these companies (employing people) are not only getting paid, they pay taxes. Home sales truly are at the forefront of any economic recovery. Playing with anything that may put a damper on that is not only bad economic policy, it's foolishness to the nth degree. Let me know what you think.
Thursday, December 2, 2010
Thursday, October 28, 2010
The Myth of the Case Against Homeownership
It's been a while since I've posted anything, but there have been rumblings in various media that homeownership is overrated and perhaps people should not push so hard to own their own home. Barbara Kiviat makes the case in Time Magazine (August 26, 2010) that "politics, industry, and culture aligned to create a fetish of the idea of buying a house". She claims that "homeownership contributed to the hollowing out of cities and kept renters out of the best neighborhoods." and "fed America's overuse of energy and oil". Finally Ms. Kiviat states that homowenership "helped us become casually self-deceiving: by telling ourselves that homeownership was a pathway to wealth and stable communities and better test scores". I'm here to tell you that she could not be more wrong!
The fact of the matter is that according to the Federal Reserve Survey of Consumer Finances, the average net worth of homeowners vs. renters is nearly twelve times greater for homeowners with incomes between $30,000 and $49,999 ($126,500 to $10,000 respectively). The disparity is even greater for those with incomes under $16,000 - $73,000 to $500 respectively - one hundred forty six times more wealth for homeowners!
Ms. Kiviat speaks of the illusion of "stable communities and better test scores" as a result of homeownership. According to Donald Haurin, professor of economics, finance, and public policy at Ohio State University, in homeownership "there is security, pride, prosperity for the family, stability of neighborhoods, and economic growth. There are benefits for children". Researchers from the University of North Carolina at Chapel Hill and The University of Michigan suggest that children of homeowners are more likely to participate in organized activities and have less screen time (television viewing and playing video games) when compared to renters. Their findings suggest that home ownership and financial stability may create opportunities for parents to engage in some positive parenting behavior.
For the last several years we've been involved in a culture war. There seems to be a greater disparity between the haves and the have nots a dissolution of the middle class. The arguments against homeownership seem to be one more step toward that end. To tell those with the least to be satisfied with their lot in life and not to aspire to anything more reeks of elitism. The great lie is that one has to be satisfied with his or her current situation. We are blessed to have the opportunity to go as far as we want to go if we are willing to work hard and not give up. A major step is homeownership. America is full of examples of people who started with nothing, worked hard and made this country the land of opportunity. There is a reason people from all over the world want to come to the United States. The American Dream is alive and well and a major component of that dream is to have your own piece of God's green earth on which to raise a family. Homeownership is not for the few, the rich, the haves. It's for anyone who is willing to work hard and dream. It is hard, but that is what makes it so satisfying when the dream comes true.
The fact of the matter is that according to the Federal Reserve Survey of Consumer Finances, the average net worth of homeowners vs. renters is nearly twelve times greater for homeowners with incomes between $30,000 and $49,999 ($126,500 to $10,000 respectively). The disparity is even greater for those with incomes under $16,000 - $73,000 to $500 respectively - one hundred forty six times more wealth for homeowners!
Ms. Kiviat speaks of the illusion of "stable communities and better test scores" as a result of homeownership. According to Donald Haurin, professor of economics, finance, and public policy at Ohio State University, in homeownership "there is security, pride, prosperity for the family, stability of neighborhoods, and economic growth. There are benefits for children". Researchers from the University of North Carolina at Chapel Hill and The University of Michigan suggest that children of homeowners are more likely to participate in organized activities and have less screen time (television viewing and playing video games) when compared to renters. Their findings suggest that home ownership and financial stability may create opportunities for parents to engage in some positive parenting behavior.
For the last several years we've been involved in a culture war. There seems to be a greater disparity between the haves and the have nots a dissolution of the middle class. The arguments against homeownership seem to be one more step toward that end. To tell those with the least to be satisfied with their lot in life and not to aspire to anything more reeks of elitism. The great lie is that one has to be satisfied with his or her current situation. We are blessed to have the opportunity to go as far as we want to go if we are willing to work hard and not give up. A major step is homeownership. America is full of examples of people who started with nothing, worked hard and made this country the land of opportunity. There is a reason people from all over the world want to come to the United States. The American Dream is alive and well and a major component of that dream is to have your own piece of God's green earth on which to raise a family. Homeownership is not for the few, the rich, the haves. It's for anyone who is willing to work hard and dream. It is hard, but that is what makes it so satisfying when the dream comes true.
Tuesday, August 3, 2010
The times, they are a changin'!
For a long time we've all been saying that the world seems to be changing every day. That is more so the case in the real estate industry. Twenty years ago Realtors(R) were the gatekeepers of information. If Ken and Barbie wanted to buy a home they'd sit down with a Realtors(R) and we'd open up our magic MLS listing books and show what was available. Today, Ken and Barbie have access to more real estate information than many real estate professionals know is out there. What's missing is knowledge. What does this information mean? How do I use this information to my advantage? How do I actually get myself into this wonderful home that I found online? This is where the real estate professional of today shines. We've been through the process many times. For the most part, Realtors(R) know the pitfalls and the shortcuts. Many can provide invaluable information on homes long before you think about making that offer.
The world is changing and it's moving fast. It's almost impossible to keep up with everything. I read sometime ago that in the coming years the most valuable commodity out there will be trust. There is no way anyone can know everything about everything we need to know to live our lives. We have to know who we can trust in those areas that we just don't know. Find someone who knows and trust him or her.
Well, that's it for now. More another time, but let me know if there's anybody out there. Drop me an email at Rick@CoughlinHomes.com or comment here. Also, don't forget to check out my web site at http://www.coughlinhomes.com/
The world is changing and it's moving fast. It's almost impossible to keep up with everything. I read sometime ago that in the coming years the most valuable commodity out there will be trust. There is no way anyone can know everything about everything we need to know to live our lives. We have to know who we can trust in those areas that we just don't know. Find someone who knows and trust him or her.
Well, that's it for now. More another time, but let me know if there's anybody out there. Drop me an email at Rick@CoughlinHomes.com or comment here. Also, don't forget to check out my web site at http://www.coughlinhomes.com/
Thursday, July 29, 2010
The First One!
Well, now I've done it! I've entered the blogging world! If there's anybody out there interested in the ramblings of a Realtor(R) with over twenty-five years experience in residential real estate, I'm your guy! I've been helping people buy and sell homes across Massachusetts South Shore from Boston to the Cape Cod Canal and (for the most part!) have a satisfied following. We'll see! :-)
The world is a whole different place than even a couple years ago. Gone are the easy deals. Everything's got a bone in it. If you're looking to buy a home in the near future, make sure your credit is good. If your score is less than 700 you're probably going to have problems. Start paying down your debt. Make sure everything is on time - don't skip any payments. Start saving - the more cash you have on hand for down payment and closing costs, the better. Make sure you keep some extra in reserve for the things you haven't even thought about (Who knew I'd need a lawnmower week after I bought my home? I can't believe it snowed and I don't have a snowshovel!) Even the things you are thinking about will cost you more than you think! Plan ahead and keep some extra cash on hand for after your closing.
If you're thinking of selling your home, know that you'll be getting a lot less for it now that you would have a few years ago. The good news is that (so longs as you';re staying in the same market) it's all funny money: whatever you lose on the sale of your home you'll make up on the one you buy. In an "up market", whatever you make on your sale you'll lose on the one you buy.
More another time, but let me know what you think. (If there's anyone out there!) You can repond here or send me an email at Rick@CoughlinHomes.com. Check out my web site at http://www.coughlinhomes.com/
The world is a whole different place than even a couple years ago. Gone are the easy deals. Everything's got a bone in it. If you're looking to buy a home in the near future, make sure your credit is good. If your score is less than 700 you're probably going to have problems. Start paying down your debt. Make sure everything is on time - don't skip any payments. Start saving - the more cash you have on hand for down payment and closing costs, the better. Make sure you keep some extra in reserve for the things you haven't even thought about (Who knew I'd need a lawnmower week after I bought my home? I can't believe it snowed and I don't have a snowshovel!) Even the things you are thinking about will cost you more than you think! Plan ahead and keep some extra cash on hand for after your closing.
If you're thinking of selling your home, know that you'll be getting a lot less for it now that you would have a few years ago. The good news is that (so longs as you';re staying in the same market) it's all funny money: whatever you lose on the sale of your home you'll make up on the one you buy. In an "up market", whatever you make on your sale you'll lose on the one you buy.
More another time, but let me know what you think. (If there's anyone out there!) You can repond here or send me an email at Rick@CoughlinHomes.com. Check out my web site at http://www.coughlinhomes.com/
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