Achieving Attainable, Sustainable Homeownership
Achieving Attainable, Sustainable Homeownership
The report by President Obama’s National Commission on Fiscal Responsibility and Reform provided a bracing and unusually candid set of policy recommendations to improve the federal government’s fiscal situation in the short term and achieve long term fiscal sustainability. The report failed to garner the votes needed to forward the plan to Congress, but it prompted significant debate over its various elements. One of the report’s lightning rods was the recommendation to significantly modify and limit the federal mortgage interest tax deduction.
Since the report’s release there have been high profile editorials in major newspapers calling for the elimination or modification of the MID. The MID is one of the “tax expenditures” or subsidies in the federal tax code that were targeted by the Commission. Like all other public policies the federal government subsidy of homeownership through the MID is fair game for debate. It’s a debate the real estate industry is ready to have.
Unfortunately the debate over the MID is taking place in the midst of the most severe economic crisis since the Great Depression. This has overshadowed and poisoned the well for what should otherwise be a rational, clear headed examination of the MID and the cultural and economic value of homeownership.
As a result, the MID debate has resulted in attacks on the value of homeownership, which are largely knee-jerk reactions to current economic conditions. Achievable and sustainable homeownership has long had a preferred place in our nation’s system of values and that is reflected in public policy. There’s a reason owning a home has long-standing government support in this country – because housing helps drive the economy and sustains families and communities, through good times and bad. No serious person would suggest that a lifetime of renting is preferable to homeownership.
The housing market and mortgage-backed securities were the first dominoes to fall in this crisis, but homeownership itself is not the villain. It didn’t create the current foreclosure crisis – Wall Street greed, irresponsible lending practices, and too many overleveraged individuals did. The vast majority of homeowners continue to make their mortgage payments on time, stabilizing their neighborhoods and communities. But the loss of jobs and subsequent decline in property values have contributed to the crisis. When people lose homes to foreclosure, our communities, the housing market and our economy all suffer, which is why REALTORSÒ care as much about keeping families in their homes as they do about helping them find one to begin with.
Homeownership remains the cornerstone of individual wealth creation and community stability. It is not a prerequisite for civic participation, but homeownership - and property taxes – are unmatched incentives for that social investment. The positive impact of homeownership on society has been well documented; extensive research from government agencies, industry, and academia has shown that homeownership contributes to stable communities, helps reduce crime and improves academic achievement. It helps revitalize urban centers, bringing amenities, public services and local economic growth that benefits all.
The debate over the MID and the value of homeownership ignores the real issue facing the nation’s economy right now – that many Americans can’t find meaningful work to support their families. Housing cannot recover until jobs return to the economy. A focus on job recovery is what’s needed right now, not misguided attempts to dismantle support for something that has helped sustain this country and its communities for generations.
The latest news continues to show how deeply distressed Central Oregon’s economy is and the vital importance of public policies that foster private investment locally and statewide. Real estate development and construction will continue to play a leading role in Central Oregon’s economy as long as land use policy erects barriers to economic growth and diversification. But diversification is critical to create living wage jobs and a more sustainable economy. Without those jobs we will not have the future homeowners who will pay taxes, raise children, and support the schools and other community institutions that sustain our quality of life.
Historically, Oregon’s homeownership rate has remained slightly below the national average. This is a reflection of a state economy that has performed below national and regional standards for twenty years as measured by per capita income. Despite improved housing affordability in Central Oregon we will not see an increase in the homeownership rate until more people find gainful employment and feel confident in our long term economic stability. Stronger jobs and housing markets feed into a virtuous cycle of wealth creation and community investment that benefits all of Central Oregon.
Moving forward, we need to ensure public policies that promote responsible, sustainable homeownership. Owning a home isn’t for everyone, but anyone who is able and willing to assume the responsibilities of owning a home should have the opportunity to pursue that dream.