Does Home Ownership Still Matter?
There has been a lot of buzz going on in the blogosphere about Home Ownership, especially since the recent housing crises, mortgage mess, high unemployment rates and recession. The question of “Does Home Ownership Still Matter?” becomes louder and louder as a proposed tax law change to modify mortgage interest deduction.
Did you know that the mortgage interest deduction has been part of U.S. tax policy since the federal tax code was first enacted in 1913. The current tax law is as follows:
Individuals are permitted to deduct mortgage interest paid on mortgage debt of up to $1 million. The deduction is available for interest on mortgages for a principal residence and one additional residence. The $1 million limitation represents the combined allowable debt on two residences. Mortgage interest on up to $100,000 of debt on home equity loans or lines of credit also qualifies for the deduction.
New proposal as stated on the National Association of Realtors® website:
As part of its FY 2011 budget, the Administration has proposed limiting the value of the Mortgage Interest Deduction for upper income taxpayers by, in effect, converting the deduction to a 28% tax credit for those individuals who are currently in the 33% or 35% tax brackets.
While opponents of the mortgage interest deduction say that this will only benefit the rich, I for one took advantage such mortgage interest deduction – I am not rich by all means – totally disagree. According to the government, homeowners pay 80 to 90% of federal income taxes, contributing to all federal programs that benefit all Americans. More importantly, among those who claim the mortgage interest deduction are almost 2/3 of those homeowners who are middle class earners.
As the American home ownership deteriorated recently, due to foreclosure, so has the American economy and that is a fact. By eliminating mortgage interest deduction this would further have an adverse affect on the housing market as National Association of Realtor® Chief Economist Lawrence Yun said home values would take an additional hit of fifteen percent (15%).
Owning a home was a dream come true!
I have never owned a home in my first 30 years of life. In fact I grew up where there was no running hot water, my parents heated the apartment that had no bathroom, only an outhouse with coal, wood, and oil.
During my husband’s military career, we rented… our rent increased yearly, we could not plant anything outside, we could not paint our apartment the way we wanted and people living in an apartment were noisy, tenants moved quite frequently, trying to get something repaired in the apartment was also very challenging.
My husband and I have lived in our home for the last seventeen years, we remodeled, redecorated, modified and raised our children and dogs in a safe environment. We never incurred an increase in our mortgage payment because we financed at a fixed rate. We had control over our lives and how we wanted to go about. Have been active in our community and volunteered in local organizations. Neighbors looking out for one another in our absence while on vacation – an American Dream come true!
As a Realtor® helping buyers finding their dream home, their first home, a home to raise their children showing them the community, the amenities, the way of life in the community, how they can flourish that in my opinion is still the reason why home ownership matters.
Fact is that housing accounts for more than 15% of the national Gross Domestic Product and that is a key driver of our national economy.
Home ownership is only part of the American dream. All cannot realize every part of the dream. Different persons realize different parts. Besides, what is the American dream? It is in the eyes of the beholder. Home ownership is not for everyone and it is a disservice to the country to suggest to all citizens that each can own a home. Our government has publicized the suggestion and the lenders ran with it. We now know the answer to the suggestion-financial chaos!
Frank, I appreciate your comment and generally I do agree with you that not all can realize home ownership. You are right – Home ownership is not be for everyone and believe me when I see someone who really can’t afford a mortgage I will advise to seek other alternatives. However, home ownership provides happier and healthier lives for the homeowner as they enjoy a greater feeling of control over their lives. Furthermore, owning a home is one of the best ways to build long term wealth.
Owning a home was my American Dream as I wrote about my personal experience, however, some may have other vision of the American Dream.