Everybody and their mother has said something about President Obama’s plan to pressure banks into making loans to people with weak credit. You know, people who will default, not be able to pay those loans back, and then end up sending banks defaulting…a repeat of the 2007-2008 collapse that got us into this recession in the first place. Most are asking “You’re kidding, right?”
What I want to know is, what’s so darn special about home ownership?
This is the big thing behind all of these programs and pushes, that supposedly, owning a home is vitally important to being an American. Obama said in his State of the Union address this year that “even with mortgage rates near a 50-year low, too many families with solid credit who want to buy a home are being rejected. Too many families who have never missed a payment and want to refinance are being told no.”
Why is so important for these families to buy a home that the government is going to force banks to make loans to these folks? Jim Parrott, a former housing adviser on the National Economic Council, was quoted in WaPo as saying that leaving these folks out “constrains demand and slows the recovery.” And the president of the National Community Reinvestment Coalition, John Taylor, complained that it’s “very difficult for people of low and moderate incomes to refinance or buy homes.”
Well, no duh! A house is a very expensive and time-consuming investment. These days, with all the energy-efficiency, green housing, and other zoning regulations established by municipalities, states, and homeowner’s associations, it takes a lot of time and money to get them just right. If you’re going to have all these complicated requirements, then that’s the way it has to be.
But even so, so what? So what if people of low and moderate incomes can’t buy a house? They can rent! And there is nothing wrong in renting. I have a low income and I rent a room in the middle of DC. It’s a tiny room, where I have to use a Japanese-style roll-up sleeping pad rather than an actual American bed, but who cares? It’s (relative to other places in DC) cheap, it’s warm, and it gets the job done. It lets me live near work, save money to buy food and supplies, and generally be independent.
Of course, some will argue that you couldn’t fit a family in my room. No argument there. But do you have to actually own a house? In Upstate New York, you can rent a five bedroom house for $975 a month. That comes to $11,700 a year, way cheaper than actually buying it. You haven’t lost any dignity. You’re just as an American, only probably with a fatter wallet.
Unfortunately, the government doesn’t agree. It doesn’t, for instance, give renters like me a tax credit for my rent or my utilities. I don’t get a deduction. And I don’t see any stimulus going for renters. Meanwhile, homebuyers and homeowners get mortgage deductions and Uncle Sam telling creditors and lenders to lay off. The administration is picking homeowners over renters, for very shaky, questionable reasons.
I think it really boils down to the idea of “the American Dream.” For the past several decades, there’s been an idea that the Dream is owning a house with a white picket fence, having all the best appliances, marble counters, tiled floors, two cars, and the biggest TV you can possibly get. But that’s a delusion, a consumerist dream cooked up by advertisers, corporations, and a government that wants spending to increase to infinity.
The American Dream is intangible. It’s freedom–the freedom to write your own life’s story, to make your own choices and own your own actions, so long as you don’t infringe on the freedom of others. Making someone buy a house isn’t going to achieve that.
The concern over home ownership is phony. Owning a home is not special. We should remember that, else we repeat the last five years all over again.