Dear President Obama,
HI!, yoo-hoo, over here, we are 100,000,000 men, women and children who rent and we seem to be invisible to you and the media (including NPR, New York Times and the Wall Street Journal) but clearly our numbers make us important. We are wondering why you are helping 9 million people at the expense of me and my 99,999,999 friends, neighbors and fellow countrymen. Not to mention the additional millions of former homeowners who will soon join us because they rationally decided to live within their means and rent.
But how is your plan hurting 100,000,000 renters? It is hurting them in three major ways:
- By putting a floor (and debatable how stable or realistic that floor is) under housing prices above what they were before the bubble began you are continuing to price renters out of the market.
- By raising the deficit you are going to be putting some of the tax burden on renters (yes some will go to homeowners as well).
- Because many former owner-occupied properties have turned into rentals rental prices are actually falling. By keeping people in houses they can’t afford you will, in effect, raise rents again.
The net result is that you are charging renters, through the eventual taxes needed to pay for this, for the privilege of NOT being able to afford a house while also raising their current rents. This reminds me of the former Soviet practice of making soon-to-be-victims of execution pay for their own bullets and then charging their families for their burials.
Point #1: This plan is further eliminating renters ability to buy a home by reducing their income (through higher taxes and raising rents) and through maintaining artificially high prices (through so-called “stabilization”).
To make matter worse renters comprise those who either can’t or have decided not to overextend themselves to have the “American Dream” (which was originally “life, liberty and the pursuit of happiness” until it got co-opted by marketing experts in the real-estate industry in the last century). Renters are STILL disproportionately Hispanic and African-American and lower income. Homeowners are disproportionately white and have higher incomes.
Home Ownership by Race - (US Census Bureau)
Point #2: Helping homeowners at the expense of renters is yet another transfer of wealth from the lower class to the upper class. How Bush-league.
Oh and why would the the vast majority of homeowners (who do, truthfully, outnumber renters) care to help us ? Very simply because the survival of any market (or pyramid scheme which the housing market has proven to be) depends on a continous stream of first-time buyers to fuel growth from the bottom. By attacking renters you are attacking the first-time buyer base and, while you may temporarily save the market, you are draining the pool in the medium to long term.
Point #3: Homeowners need to watch out for renters if they want to truly protect their home values.
How can you help? Well if you can’t bring yourself to let the market work out the right price then at least provide renters with some rental income tax deductions so they don’t wind up paying (two to three times) for the mistakes of homeowners. Additionally this will help incent those on the edge of home-ownership not to over-stretch to buy a house so they can get the equivalent mortgage income tax deduction. Its the least you can do.
Finally, of those 9 million you are helping, at the expense of 100,000,000, how many got themselves into their situations by cashing out their equity cushion for home-improvements, new cars or family vacations? I guess its comforting to know that the money we saved by renting will go to buy some nice stuff…even if it isn’t ours.
DO YOU HAVE A STORY OF HOMEOWNERSHIP GONE BAD? If so share it on reallyfuckedhomeowner.com.
ADDENDUM: In honor of Rick Santelli’s Tea Party I have posted his poll here so you can voice your opinion to the Obama adminstration.
Rick Santelli of CNBC (as do I) want to know the following:
To see what the Rick Santelli Housing Bailout Tea Party is all about see this video
