Sunday, March 6, 2011
The idea that a mortgaged house represents the pinnacle of the American dream is flawed on many levels. Not the least of which is that there is a certain economic reality which requires real equity in order to justify making an efficient loan.
Unfortunately, that reality was increasingly ignored as both the federal government and the private market pressed through loans for individuals who simply did not possess the income to likely repay them.
Now that we've become Foreclosure Nation, the idea of a return to more renting is coming back.
This WaPo article discusses why this could be a very efficient trend:
Rising market demand for rental housing is already a fact, the result of economic recession, rising unemployment, flat or falling home prices and more-conservative loan practices. For a growing portion of the American population, the probable reality is that conventional home ownership will be economically unfeasible and, with gradual or no appreciation in home value, relatively unprofitable. Increasing numbers of American households will rent.
But will this be detrimental to American society and culture, perhaps signaling the end of the American dream of home ownership?
Tomorrow's reality will not be a nightmare. Rather, it will be the manifestation of a common-sense, rational concept disregarded during the housing bubble years: Homes should be bought and owned only by people who can sustainably afford to pay the full gamut of home ownership expenses, including mortgage principal and interest, taxes, insurance, utilities, maintenance and repairs. For others, renting will be the economically prudent and necessary choice. Yet it can be a desirable choice.
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