By Lesley Sillaman, Friday, June 25, 2010, at 9:57 am.
This week, discouraging news was released about new-home sales in May: The number plummeted 33 percent from April. Now that the government-sponsored $8,000 tax credit for new homebuyers has expired, it seems potential purchasers have cooled their heels on what used to be the staple of the American Dream.
Occasional special credits and longstanding “permanent” tax write-offs such as the deduction of mortgage interest have placed an inherent advantage in owning a home versus renting. The mortgage companies and quasigovernmental housing agencies followed suit, marketing their version of the dream to young professionals by dangling carrots of several-hundred-thousand-dollar “starter homes” to young people with starting-salary incomes and no credit.
For years, marketers across a range of industries have relied on homeownership as a key component when promoting that dream. But should we—as marketers and as Americans—be finding out whether homeownership really matters to young people today or even rethinking its viability as a good investment for many people, young and old? Maybe young people are right not to buy. Is that aspect of the American Dream truly a reality—or even desirable—for them? Should it be?
NPR recently ran a story about the flaws in our country’s economic system, which has long encouraged people to hold out homeownership as the holy grail. In NPR’s story, Wall Street Journal Economics Editor David Wessel cites the fear politicians have with encouraging anything other than homeownership as ideal. Perhaps the system needs to change.
Renting is an easy way to allow mobility—which in today’s job market can be a necessity. And in a world in which people no longer work at the same job for 30 years, or even live in the same city for that length of time, and with many people delaying a purchase until their early 30s, the long-held standard of the fixed-rate, 30-year mortgage guarantees a house payment well into one’s 60s. What will that mean for retirement?
Nothing irritates me more than when people lament renting by saying, “You’re not getting anything out of it.” Sure, unless you consider that you’re still getting a place to call home! It seems to me that it’s time for our governmental policies to catch up and reflect the true reality of homeownership today—that it’s not for everyone and that the system should equally recognize the value of renting and homeownership.
(Full disclosure: My husband and I purchased our first home together two years ago and love it. Before that, I rented for eight years and loved that just as much.)