[freshcream]

I was in a discussion with a few friends the other day about what is most beneficial for the state. If people own their own place, or if they rent.

Where I'm from the media pushes you to buy all the time, and the government is always trying to make it harder to rent and easier to own. I think it's even in most parties programs, that the common man should be able to own his own place.

We we're discussing things as freedom and debt. That the modern slavery is debt and wages. A really fun discussion actually.

I had to end the discussion eventually, when I just didn't have the facts at hand.

Any help and info on the matter would be appreciated.

[Pete]

Property Taxe$$$

[Celtic]

You'll pay property taxes, but you'll save on income taxes with the mortgage interest deduction. It's hard to understand what you mean by "The State" here, but the politicians who run the State push homeownership and make it easier because it's a popular stance. Most people eventually want to own property.

[Ensam]

From a tax perspective the state only cares about the number of households. It doesn't matter to them if you pay taxes or your landlord does. The push for more home ownership came out of studies in the middle of last century showing that children of homeowners did better than children of renters. It became a very popular social program, really getting rolling under Bush I. Then Greenspan used cheap capital for homeowners as a way to prop up the economy after the crash in 2001.

Personally I think it's a giant case of mixing up causation and correlation. Children of homeowners do better because historically only stable relatively well off people could afford homes. Their children, surprise, surprise, end up doing better than the children of the less stable and less well off. Lowering the bar to homeownership (especially by offering 0% down loans) does nothing to increase the wealth or stability of the people who shouldn't be owning homes in the first place. If anything it made their lives worse because whatever little money they did have went towards paying off interest only loans.

Edit: Forgot to put in the link to some of the studies - http://www.habitatnyc.org/pdf/Toolkit/homewonership.pdf.

It's amazing to me that they still say:

Quote:

Homeownership acts as a powerful economic stimulus. Th e benefi ts of homeownership work on every level
of society. Homeownership provides substantial economic benefi ts to the individual homeowner, to the homeowner’s
neighborhood, and to the national economy.

[freshcream]

Thanks for your input guys.

I just can't but think that the government is pushing for owning of property because it's benefitial for them. Which in turn means that renting is less beneficial. But why would that be? And not just the direct tax differences.

[Ensam]

To understand the incentives you have to realize that there is no 'the government'. There are lots of people in the government each with their own agendas. All those agendas coalesce together into some action which looks like it's well planned and thought out. I think a lot of the policy wonks actually believe that increases in home ownership is a good thing. It was a major part of the Republican platform in the 80s and 90s. The banks love it because they have more leverage over individual consumers than they do over large real estate groups. Remember the saying, "If you owe the bank a million dollars it's your problem. If you owe the bank a billion dollars it's their problem." The Fed loved it because it kept consumer spending up and covered over the fuck up that was the dot com bust. So basically you had a whole bunch of people with different agendas who all ended up liking the same outcome (mortgage interest deduction, lower interest rates, etc.). Now that those benefits are in place it's very difficult to remove them. Imagine the outcry if we got rid of the mortgage interest deduction. It's the largest subsidy in the US and nobody wants to touch it.

So even though home ownership probably isn't helping things at the moment-you could argue it's actually responsible for the mess we're in-the incentives setup in the 80s and 90s aren't going anywhere because it's a lot easier to give than it is to take away.

[Blackhawk]

Property taxes are based on the value of the property. A bunch of people living together in a shared building provide much less property taxes than the same number of households living in multiple more expensive houses individually.

Also, higher income households want less hassle in their lives, and will pay to improve their lot. They don't want to hear neighbor's stereos blasting through the walls, or the drunk next door watching porn at 2am and masturbating to it, or being kept up all night by someone's party, or worry if they're fucking too loudly and the neighbors might hear it and knock on the door complaining. If you want to attract and retain higher income households, you have to make housing available to them that meets their standards --which is almost always single family housing. Or else they move away. And take their income tax revenue with them.

But it's not just the property and income tax revenue. As Plato pointed out in The Republic, City structure has a large effect on social structure. Better cities produce better people. Poorly constructed cities raise poor, maladapted people.

The focus on parks, schools, libraries, recreation programs, improvements in housing stock quality (including private garden space ie back yards), are all because of the long standing recognition that The City makes The Man.