(NPR) Generation Rent: Slamming Door Of Homeownership
In theory, fewer homeowners will mean municipalities will rake in less revenue from property taxes. But Pendall believes local governments will simply adjust to make rental properties "a larger share of the tax pie."
And within those communities, some businesses will feel the pinch. Dan Ariely, a professor of psychology and behavioral economics at Duke University, says a wave of renters would have an obvious impact on the massive consumer industry that supports homeownership.
"My subjective experience is that when people buy a house, they immediately start renovating and fixing it — going on Sunday afternoon to Home Depot, doing things that I think people would never do for houses that they rent," he says.
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Filed under: * Culture-Watch
* Economics, Politics
Housing/Real Estate Market
Posted June 8, 2012 at 5:45 am
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The URL for this article is http://www.kendallharmon.net/t19/index.php/t19/article/43307/
1. Bart Hall (Kansas, USA) wrote:
More lameness from NPR (dog bites man, I know). The leading social and economic demographers (Strauss & Howe and Harry Dent) have the Millennials as being between 1982 and perhaps 2004, not 1975 to 1995, which is a fairly meaningless bracket.
The US Bureau of Labor statistics has the starter house being purchased at about age 32, so you’d expect folks in their 20s to be renting and “bouncing around.” They need that sort of freedom as they settle into a career path: houses are difficult to sell, and that’s nothing new. These days older folks often want (or need) that sort of freedom, too, and are increasingly choosing to rent.
As one who has built or restored quite a few houses, for myself and other people (and I mean with my own hands) I can assure you that apart from a housing bubble like that of 1997 to 2006 a house is a liability, not an “asset”.
What’s a house worth as a place to live? Take the monthly rent of similar places in the same area. Add two zeroes. That is the MAX the place is worth as somewhere to live. That so-so house renting for $1,100 per month? Is it selling for just over $100,000? It might be worth it, though if built much after about 1957—and especially the mid-1980s—the lousy construction will just about guarantee maintenance misery.
Leave that to the landlord who might have overpaid for the house.
June 8, 7:59 am | [comment link]
2. Capt. Father Warren wrote:
I recall many moons ago as I was finishing graduate school and heading out into the real world, my father drumming into my head not to rush into buying a house, but rent. His reasoning [probably common to his generation] was that a house was simply a place to settle down and make your own, ie, it was not an investment or 12 month parking place.
Over the years we have done a mixture of renting and buying. At the end of 6 purchases and 5 subsequent sales, some during the “housing bubble”, I figure we have ended up at a net zero financially: a couple of signficant wins, one big loss, and a couple of break-evens….....that it was that good is by the grace of God. Certainly nothing we can claim credit for….....
As Bart noted, houses are hard to sell, and they are getting harder. Just read a Realtor agreement today and the stack of signing papers at close. The Government has inserted itself into the process with great expense: and if Obamacare goes fully into effect, you ain’t seen nothing yet! That’s right; Obamacare has buried within it all kinds of “green” stuff about standards your house will have to meet in order to sell it. None of which will help market the house or shore up your bottom line when [or if] sold.
June 8, 8:53 am | [comment link]
3. Bart Hall (Kansas, USA) wrote:
CFW: what parts of the Obamonstrosity? My in-laws are medical people, so that’s what I’ve looked at the most. Where are the “green” house requirements? Not challenging ... I just don’t know.
June 8, 12:15 pm | [comment link]
4. BlueOntario wrote:
I was speaking with my neighbor about the pros and cons of home improvements and putting on additions and the like when I received the inevitable comment about the fear of not getting one’s money out of the investment. In reply I asked how much money they got back from their last vacation with the kids.
A house is a place to live. Preferably it will also become a home.
June 8, 1:11 pm | [comment link]
5. softwords wrote:
Municipalities should not be affected by reduced tax receipts because someone will own the property. Those owners will pay the property taxes. The only difference should be who directly pays the taxes; it will not be the residents, even though the taxes will be included in the rents paid.
June 8, 1:38 pm | [comment link]
6. Capt. Father Warren wrote:
Bart, I see I made an error. Thanks for getting me to do my homework [engage brain before mouth]. It was not/is not Obamacare. This was in the Cap & Trade legislation that has gone nowhere up to this point. As part of that scheme, private homes would have to meet certain energy use requirements prior to sale. These could only be achieved by having certain windows, attic insulation, and heating/cooling appliances, etc. Obviously, for older homes this could be a huge burden. The reason I recall this, is that two years ago we put in a new state-of-the-art heat pump and it likely would not meet the proposed requirements!
June 8, 1:48 pm | [comment link]
7. Archer_of_the_Forest wrote:
I inherited my wife’s mortgage and house when we got married. I had previously rented. I put in a full years work and I don’t know how much money renovating that house. I then had to move and sell at the worst part of the housing bust a few years back. Luckily, I got out breaking about even. I have to say it soured me on wanting to buy another house. I agree wholeheartedly that home ownership is a liability, not an asset.
June 8, 3:57 pm | [comment link]
8. Bart Hall (Kansas, USA) wrote:
CFW: a lot of counties already have what is called “California Rule” which is that if you wish to pull a permit for any work on a house then every aspect of that house must be brought up to code. You wanna change out a hot water tank—in our county that requires a permit—then your gas, electric, plumbing, insulation, heating, and the whole mess must be brought up to current code: even if you have no intention to sell the house.
What happens is that about two-thirds of all work gets done without a permit, and payments are usually in cash. Actually, around here the “cash” economy is doing pretty well. You just have to have cash.
June 8, 6:08 pm | [comment link]
9. Cennydd13 wrote:
A few years ago, my wife and I decided that we needed to remodel the shower stall in our master bathroom, and we thought of contacting the VA for a contractor (I’m a disabled veteran). When we found that it would cost a minimum of $10,000, we told our daughter about it, and she suggested we take a look at what we really needed to do.
In the end, we decided to save Uncle Sam that $10,000 by doing the job ourselves, and it ended up costing us $65 by installing a hose-type shower head and a shower bench. Problem solved!
Here in our town, the remodelling business is moving along pretty well, and the small contractors are busy, with the big box stores (Home Depot) showing a profit as a result. The nice thing about doing it yourself is that you can stretch the work out as your budget allows, and the inspection fees here are reasonable.
June 9, 2:33 pm | [comment link]
10. Capt. Father Warren wrote:
C13 the other benefits of doing it yourself are a) getting done right, b) getting it done the way you want c) not hasseling with a contractor
Early this year we decided to get rid of our very heavy wooden/big glass front door in exchange for a new steel door. Energy savings and security being the two prime drivers.
The old door was way heavier than I could handle alone so I contracted with Lowes to come out and put in the new door. What a mess. The new door was not squared in the rough opening properly and after haggling with Lowes I gave up, resquared it myself and finished the frame and lock/deadbolt myself. They even managed to lose the steel security shield around the deadbolt opening so someone can’t kick the door in easily. I should have just hired a neighborhood teen to come be my muscle.
June 9, 2:53 pm | [comment link]
11. Cennydd13 wrote:
And we didn’t require the services of an inspector!
June 9, 10:04 pm | [comment link]
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