Home Ownership or Parasite Buffet? Who’s Sucking your Money Blood?

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The next few posts will be a series on financing home ownership and a comparison of two popular mortgage products, the 15-year and 30-year fixed rate loan.  But first, I’d like to take a look at some common beliefs about home ownership:

Common Belief: A high percentage of home ownership is a worthwhile goal

Background: The philosophy that a higher percentage of home ownership is good public policy can be traced to the 1930’s.  The country was in the midst of The Great Depression and millions of people could not find work.  According to the U.S. Bureau of Labor Statistics, the official unemployment rate peaked at about 25% in 1933.  Franklin D. Roosevelt was elected president in 1932 and embarked on one of the most ambitious expansions of federal government in history.  But the favored status of home ownership goes back farther to 1913.  According to investopedia.com, the home mortgage interest tax deduction was introduced in the same year income taxes began.  The government has had an active role in promoting and subsidizing home ownership as public policy ever since.

The Pulitzer Prize winning writer James Truslow Adams is credited with first referring to the “American Dream” in his 1931 book, The Epic of America.  The phrase comes from a paragraph that speaks of the ability to achieve a better quality of life according to each person’s ability regardless of birth order or social status.  However, nowhere in his statement is there a reference to home ownership being part of the American Dream.

Uncommon Sense: Follow the money and ideology trails.  The list is long of groups that profit from home ownership including lawyers, title companies, appraisers, mortgage brokers, banks, federal, state and local governments, local taxing authorities, public education, contractors, insurance companies, utilities, telecommunication companies, moving companies and relocation services to name a few.  By aggressively promoting and subsidizing home ownership the government provides a financial host for a number of politically influential groups.

Do you feel home ownership for everyone is a worthwhile goal?  Why or why not?

 

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About Michael Shelton

Your Business Coach Facilitating Delegation and Work Group Engagement Michael Shelton has over twenty-five years of business and military accomplishments, including extensive experience with one of the largest, publicly traded real estate investment trusts (REIT). He is a qualified business coach with assignments in cross-functional work group management, strategic planning, unit leadership, joint venture acquisitions, executive education, mentoring, training and merger integration. Michael has accumulated best practices for building committed work groups from more than $4 billion of capital markets transactions and commercial property development. He served as a commissioned officer and helicopter pilot in the U.S. Army, and earned his MBA from The University of Arizona. Michael has served as a major conference panelist and is the author of Cash Flow Rich, Winning Ways to Evaluate and Finance Real Estate. Today, he helps business owners get more work group engagement as President and CEO of Shelton Business Services, LLC in Scottsdale, Arizona. Disclaimer: I don't offer investment, legal or tax advice. Talk to your broker, accountant or lawyer for investment, tax and legal help. I might own stock in the companies I mention on-line. My posts, tweets and other on-line activity are my personal thoughts and don't represent my employer or company.
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