Let’s stop encouraging homeownership

Let’s stop encouraging homeownership October 21, 2017

from Wikipedia; https://commons.wikimedia.org/wiki/File%3AOmer_Kem's_sod_house.jpg; By Solomon D. Butcher (1856-1927) [Public domain], via Wikimedia Commons

So, it turns out, the big adventure of the past week in the Actuary home has been dealing with a broken, non-repairable fridge.  The new one will come on Thursday, but in the meantime, we have been keeping some perishables in a cooler (for which the ice melted unexpectedly soon, so I’ll have to replace the gallons of milk, and figure the margarine, cheese, and jelly will be OK).

I deliberated about what to do with respect to a new fridge — do we get French doors?  An in-door water dispenser?  Something super-high tech?  Ultimately, partly because we don’t have a water line, and I don’t want to know the plumber’s charges for installing one, we went with a very generic model, the twin of what we have right now.

So, fine.  It’s a hassle to have to deal with food-from-a-cooler until Thursday, what with trying to figure out meals that I can make that don’t require a lot of perishables, and needing to make near-daily trips to the store rather than my usual weekly trip.  And it was depressing to have to throw out All That Food, and I’m a little worried the trash bin is now too heavy for the garbage truck to take it.

But I’m an actuary.  So is my husband.  One thing that means (besides the country’s lowest divorce rate) is $$$. We can deal with it.  I mean, yes, I was in a crummy mood for the past week, and I’m now irritated that I need to spend some time cleaning a broken fridge, because it’s really starting to smell and my husband’s travelling so there’s no way to even get it out into the garage until he gets back, but we can deal with it.

But every time this sort of thing happens, I think, I can’t even begin to imagine what we’d do if we were barely keeping our heads above water as it is.  I mean, sure, a couple generations ago, there would have been no fridge to break down — my dad still likes to use the term icebox, from his childhood.  But consider that the costs of homeownership extend far beyond the ability to make a monthly payment, and can be some of the most substantial unexpected expenses an on-the-edge family can face:  not just the fridge, but the furnace, the water heater, a plumbing problem, the roof, or a failed sump pump — all items which, perhaps, however many generations ago it was that we adopted this notion that “everyone should own their home,” and certainly in the days of the soddie above, either didn’t exist or could be presumed to be repaired by the homeowner himself.  (I didn’t include washer & dryer because my impression is that outside my sheltered upper middle-class world, it’s fairly ordinary to take your clothes to the laundromat.)  These are the sort of expenses that push people into payday loans and other sorts of debt that they struggle to climb out of.

And it’s not just harmless “nudges” that might be nudging in the wrong direction.  Renters pay higher rents than they otherwise would because their landlords pay higher property taxes than they otherwise would, because they don’t get owner-occupier deductions and because their property is assessed at a higher commercial-property rate.  Everyone pays higher taxes than they otherwise would because homeowners get tax breaks for mortgage interest and property taxes — the proposed replacement of various piecemeal deductions with one much larger standard deduction would treat renters and homeowners equally in this regard.  And that’s not even addressing the government programs to give people the ability to buy homes in a subsidized fashion.  As Megan McArdle wrote earlier this month, the U.S. is nearly alone in having a 30-year fixed mortgage as the standard manner of purchasing a home, and we don’t hear a lot of lamenting that Europe is just a cesspool of misery.

Now, granted, I wouldn’t go so far as to say that we homeowners should all be paying taxes on the imputed rent of our homes, like they do in the Netherlands.  But I can’t support the Chicken Littles who say that the sky will fall if we stop handing out subsidies to homeowners.

Yes, we say, homeowners are more stable, and care more about their neighborhoods, so in order to have stable, cared-about neighborhoods, we need more homeowners.  But it’s a circular argument:  you create subsidies to move stable, responsible people into homeownership, then say, “homeowners are responsible people!”  Did homeownership itself actually create these desirable personality traits?  (And, yes, I’m aware that this is a simplification, and in a perfect world, I’d have enough time on my hands to actually dig into data on this point.  But I don’t; this is just a break from Saturday chores.)

So, yes, this is my usual soapbox, but it seemed like a fitting time to climb on that soapbox, what with the new fridge and the tax reform discussions and so forth.


Image:  from Wikipedia; https://commons.wikimedia.org/wiki/File%3AOmer_Kem’s_sod_house.jpg; By Solomon D. Butcher (1856-1927) [Public domain], via Wikimedia Commons

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