Paul Krugman, of the New York Times, writes that our general American outlook is against renting and actually views renters as “unpatriotic” regardless of political party affiliations. It is an interesting concept and I am well aware of all the reasons that Realtors and Mortgage Brokers remind people of the benefits of homeownership (I can hear you thinking so I will add that this is hopefully separate from our own financial incentives). He adds that “because the I.R.S. lets you deduct mortgage interest from your taxable income but doesn’t let you deduct rent, the federal tax system provides an enormous subsidy to owner-occupied housing. On top of that, government-sponsored enterprises — Fannie Mae, Freddie Mac and the Federal Home Loan Banks — provide cheap financing for home buyers; investors who want to provide rental housing are on their own.”
Krugman raises some valid points that home ownership is not for everyone especially given the financial risks involved. This is a very big reason not to own since someone who has trouble paying their bills, either due to lack of money coming in or excess money going out, is not going to prove to be a good candidate for the financial resposibilities of home ownership. I do agree that the government could have some incentives for renters and not only favor homeowners.
There are clearly benefits, tax and other, to owning a home but it is and always will be not for everyone.
Filed under: real estate
