A Home is a Basic Expense; Not a Wealth-Building Vehicle.
“Homeownership is a path for building wealth in the U.S. The median homeowner had $254,900 in wealth in 2019, compared with $6,270 for the median renter, according to the Federal Reserve’s Survey of Consumer Finances.
“’It’s a wake-up call,” said Gay Cororaton, senior economist and director of housing and commercial research at NAR. ‘Policies have to be focused more on making sure that the lower-income and many more middle-income folks participate in the benefit of homeownership.’”
So says a report from The Wall Street Journal this morning.
Unless you live where many people want to be, it is and always has been misleading to call home ownership a “path for building wealth.” If anything, it’s an inflation hedge that guards against poor monetary policy and stewardship of the dollar.
The housing bond in May will not help this, and will arguably make things worse.
When the federal government, both the president and the Federal Reserve, support a weak dollar, a couple things happen. One, it makes some things more expensive because, since it has been devalued, it simply takes more dollars to buy things.
This is why the cost of basics such as food and oil/gas rise.
Two, future gains from investment (what actually drives economic prosperity; NOT consumer expenditures) become less predictable because of the weaker dollar, and uncertainty which direction the value of it will go. As a result, the price of gold goes up.
Another ‘asset’ that rises in value is housing. It’s why you see increased investment in rental properties, and home remodeling, for example.
City and county government know this, and cash in via property taxes. Compounding matters, they embody the true definition of greed in our society when they can’t be bothered to cut rates, nevermind doing the right thing and uprooting and abolishing the whole enterprise.
To think government-directed housing policy, which invariably invites cronyism and corruption, can fix this problem is the height of arrogance or ignorance, or both.
Vote “NO” on the housing bond.