I recently had a conversation with a friend who expressed personal concerns over being a home owner. He is struggling with some financial obligations that inevitably come with home ownership and life in general. The American dream of being a home owner has recently become more of a challenge for him than anything else.
House poor describes a person who spends a large proportion of his or her total income on home ownership, including mortgage payments, property taxes, maintenance and utilities. House poor individuals are short of cash for discretionary items and sometimes have trouble meeting other financial obligations like medical or student loan payments.
It happens to each of us that there are times when the confluence of events conspires to use up your reserve funds. As my friend considered how to extricate himself from financial difficulties, he was analyzing the value he obtains from his home owner status. Should he get a roommate to ease the financial burden or maybe he should just sell his home and become a renter to reduce his monthly payment?
He was struggling with conflicting emotions stemming from the thought of selling his house. He didn’t want to disappoint his parents and their long held desire for him and his siblings to be homeowners. At the same time he didn’t want to struggle with payments on something that was creating stress instead of providing a source of comfort and satisfaction.
His situation became food for thought on what I have often wondered about as our fixation on home ownership as a rite of passage into being a part of the American landscape. At some point in our history, we have as a society integrated owning your own home as a primary goal when we define the “American dream.”
It used to be that your home was a financial investment. You could almost always count on the fact that when you sold it you would make money to apply to your next home that went beyond your equity. That is no longer a truism and has often proven to be quite the opposite.
These days appreciation of real estate is not something that can be counted on in the short run or even in the long run. You just don’t make money from selling your home any more. More often than not you can count yourself lucky if you get back what you put in it.
One of the other financial benefits of home ownership was the ability to deduct the interest your home mortgage payment generated from your income taxes. These days of low interest rates have made the refinancing of the home mortgage a regular banking occurrence. It has reduced those deductible payments enough that it barely offsets the other escalating costs of home ownership.
It would seem to make poor financial sense to purchase a home with the uncertainty of not knowing how long you are going to remain in an area. There are similarities to purchasing a car, if you are going to get a new one every couple of years, then you probably ought to just lease.
From insurance to taxes to maintenance it becomes a significant cost to keep your investment in good working order. Home ownership is a major expense that makes the investment status marginal depending on the individual circumstances.
All the above begs the question of whether it is time to create a paradigm shift for what constitutes the American dream and what role home ownership plays in realizing it.
In non-urban areas we tend to be dismissive of those who do not own their own home. Is the thought that they are not part of the fabric of society if they have not bought a home and put down roots in our community? Maybe we perceive they haven’t made the investment necessary to be taken seriously. Are we home ownership snobs?
Have we focused on facilitating home ownership for our citizens so thoroughly that we have somehow pressured people into something they don’t want and can’t handle and just plain doesn’t make good economic sense?
Have we created a cultural disadvantage to those who opt for renting? Are we dismissing those who rent because they have historically not been community oriented or are they not community oriented because we have been under-valuing their contribution to our neighborhoods?
Renting should not automatically cause us to presume someone is going to be a bad neighbor. There are many people who have opted for renting and take great pride in their homes and their neighborhood. It doesn’t require ownership to foster respect for property and community. It is a display of good character to be a good neighbor.
Perhaps it is time that the concept of the American dream focuses on involvement and engagement in the community rather than having a name on a deed.
The Dispatch Editorial Board is made up of publisher Peter Imes, columnist Slim Smith, managing editor Zack Plair and senior newsroom staff.
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