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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Elroy who wrote (8184)	8/27/2007 11:50:54 AM
From: Augustus Gloop	Respond to of 33421

I'm not convinced this will be contained to a specific end of the economic scale. It doesn't really matter - there wont be a bailout. It will be interesting to see how this plays out

To: Elroy who wrote (8184)	8/27/2007 12:32:17 PM
From: The Ox	Read Replies (1) \| Respond to of 33421

BS. This total ignores the building of equity in the house, something renters do not have. Similarly, the conclusion that owning a home was not a happy sojourn simply because these homeowners returned to renting is not clear cut. Divorces/separations, new jobs/relocations/loss of jobs and many other factors play into the equation. Most importantly, paying off your mortgage versus renting does not imply that you could have put your money into T-Bills to get a better return on your investment if you rented!! HA HA. Nice idea but total BS. What Ivory Tower is the author living in? Maybe the grad student needs to see what happens in the real world and get out of the library!!! Yes, many would consider paying a higher monthly mortgage versus the amount that they would pay in rent due to the fact that they eventually are building up home equity. Yes, too many over due this and find themselves over extended, saddled with larger mortgage payments then they can actually afford. This does not mean that the concept of owning a home is "dubious" if you are a lower income earner. Just my opinion! She considered a simple question -- "whether or not low-income households benefit from owning a home." Her discoveries are bracing: Of low-income households from a nationally representative sample who became homeowners between 1977 and 1993, fully 36% returned to renting in two years, and 53% in five years. Suggesting their sojourn among the homeowning was not a happy one, few returned to homeownership in later years. Even among those who held on to their homes for 10 years, the average price-appreciation gain was 30% -- less than if their money had been invested in Treasury bills. This meager capital gain was about half that enjoyed by middle-income homeowners. A typical low-income household might spend half the family income on mortgage costs, leaving less money for a rainy day or investing in education. Their less-marketable homes apparently also tended to tie them down, making them less likely to relocate for a job. Ms. Reid's counterintuitive discovery was that higher-income households were "twice as likely to move long distance if they're unemployed." Almost needless to add, the great squarer of circles for middle-income homeowners, the mortgage-interest deduction, won't turn a house into a paying proposition for those with little income to shelter. Bottom line: Homeownership likely has had an exceedingly poor payoff for millions of low-income purchasers, perhaps even blighting the prospects of what might otherwise be upwardly mobile families.