Mixed Mesages for Real Estate Buyers
“It’s a great time to buy,” says the National Association of Realtors.
Alternatively, says NAR, existing home prices in October 2007 were down 18.7 percent when compared with a year earlier.
Increased real estate ownership is a national goal which has produced helpful and useful national policies. For instance, we encourage homeownership by tilting the tax system to favor owners. As a property owner you can write off property taxes, you can deduct mortgage interest in most cases and when you sell you can shelter profits of up to $500,000 (if married) and $250,000 (if single) from federal taxes.
We do these things because we believe that ownership gives people a greater stake in local communities and because owning a home affords individuals a certain ego, status and financial standing.
And yet as a society we need renters and we recognize that not everyone benefits from homeownership. We need renters because without them investment real estate would make little sense. Also, not everyone should buy, especially individuals who will be short-term residents in a given community, those with small, declining or uncertain incomes and those who live in areas where both jobs and people are leaving.
Real estate ownership is not a good short-term option because of the costs to acquire and sell property, but it routinely makes sense for those who expect to hold for a longer period, say five to ten years.
“The national median price of homes bought ten years ago has increased 88 percent. The number of US households is expected to increase 15 percent during the next decade, creating a continued high demand for housing,” says NAR.
The view here, for whatever it’s worth, is a little different. People ought to buy real estate because it’s an investment that provides shelter, tax breaks, amortizing loans, the potential for appreciation and encourages the joy of individualism, having something of your own to shape and develop as you wish — an option unavailable to tenants.
by Peter G. Miller
