Sign in. Forgot your password? Get help. Privacy Policy. Password recovery. Please enter your comment! Please enter your name here. You have entered an incorrect email address! Of course, as with most things political, the government didn't act entirely on its own, according to Eugene White, professor of economics at Rutgers University and co-editor of the book "Housing and Mortgage Markets in Historical Perspective. The breaks White referred to are some of the biggest incentives toward homeownership today, according to Greg Nagel, managing broker of Ask Nagel Realty in Chicago's West Town community area.
Homeownership, said Nagel, "represents probably the most risk-free investment opportunity to build wealth due to the tax advantages," such as the mortgage interest and property tax deductions. But as was made painfully clear during the housing crisis of , real estate investments aren't always a sure thing. And this knowledge may loom large for an entire generation of Americans. Of course, some young people didn't just watch their friends and families get overtaken by the housing crisis.
Some experienced it firsthand. I want to build my career, I want to build a home,'" Napolitano said. That was what they really instilled in me. But then, "The market changed and with it so did my opinion of homeownership," Napolitano said. Plus, she said, life as a landlord just didn't suit her. After living in the home for seven years, Smolik moved out and began leasing the unit to renters.
These experiences aren't unique to just a few young people here and there, according to Richard Green, director and chair of University of Southern California's Lusk Center for Real Estate.
In generations past And I think that's probably the most profound lingering impact of the crisis. Another issue that can't be overlooked: "Millennials are dealing with crushing student debt," attorney and author Goodnow said. And even if young people do want to buy a home, said White, the Rutgers economics professor, "getting a mortgage is no longer as easy as it used to be. The terms are much more difficult.
The banks are compensating for mistakes they made. Home buying is one of the most stressful events most households undergo. While renters can call their property manager or building supervisor to fix a leaky sink or replace broken windows, homeowners must invest their own time and money to maintain their homes. Considering both the costs and benefits, homeownership should be viewed not as an end goal of public policy, but rather as one possible mechanism to achieve several different policy goals.
Instead of focusing on how to move renters into homeownership , a better question for policymakers would be: how can policies help both renters and owners achieve the financial benefits associated with homeownership, while choosing the tenure that best fits their financial needs, lifestyle preferences, and life cycle stage? Three areas are particularly important for policy change.
Harry J. Reeves Tuesday, November 20, Both renters and owners want good neighborhood amenities : access to employment centers and transportation, safe streets, good public schools, grocery stores and other basic household services.
Too often, local zoning laws restrict the development of apartments in high opportunity neighborhoods. In particular, many affluent residential areas only allow single-family detached homes, which are the most expensive housing type to purchase or rent. One disadvantage of renting is uncertainty about the future — both in terms of whether you will be in same place, and how much it will cost.
For low-income families , residential instability is largely a function of not having enough income to cover monthly rent. Providing more income support — whether through expanded housing vouchers or mechanisms like the EITC — would help these families. In markets where housing costs rise faster than incomes , even moderate- and middle-income renters may not be able to absorb rent increases when their leases expire.
One way to hedge against rent inflation could be to expand the use of multi-year leases already the norm in commercial real estate and for residential properties in some non-U.
Such leases could set out pre-determined annual rent increases or could tie rent changes to some external cost index similar to the mechanism for adjustable rate mortgages. Another area under discussion is expanding renter protections under landlord-tenant laws. The foreclosure crisis drew attention to numerous information failures in the mortgage market, leading federal regulators to provide more information disclosure and other consumer protections for new home buyers.
However, tenant protections also need to be carefully designed to avoid unintended consequences that harm vulnerable renters. That homeownership has become the default wealth-building mechanism in the U. Policymakers should develop alternative programs that make use of the best features of homeownership. Further, any wealth building program should offer professional asset management because most individual investors are poor at picking stock market winners and low transaction fees.
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