Quote:
Originally Posted by fishbones
I don't think that's the only reason many people can afford the house, but it's a significant amount of money that usually goes back into the economy. In my case, we spend our tax refund money on a vacation and other non-essential things. If our refund is much smaller because of that deduction, we won't be spending as much. If others do the same thing, it's only going to hurt the economy.
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Effect on the economy wasn't my point. My point was with regards to the extremely poor financial decisions a huge portion of the country makes. If Salty is right in saying that people will have to sell their homes without the deduction, then it is just another example of John Q. Public making poor decisions with his money and playing his small (as minuscule as it is) role in hurting the economy. The sad part is that I know at least a handful of people facing this exact situation.
People should not be buying houses without 6 months worth of bills saved up and a surplus of income each month. Strict? Yup. Means many people wouldn't be living in a home right now? Yup. But it's the responsible decision.
Quote:
Originally Posted by Jim in CT
The worst thing about removing the deduction is, it will send housing prices WAY down, because the same house will suddenly cost a couple hundred more each month. It would be horrible...
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Absolutely. An already battered market would crash even harder. The government subsidizes everyone's house so you're paying for it either way.
Quote:
Originally Posted by Saltys
Johnny D it's not any reason to buy a house unless you look at what you would be paying a landlord and losing all your money forever vs paying a mortgage company for the rest of your life that is being subsidized by the us govt. It would raise the cost of living in a home too much for many because of higher taxes.
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I'm guessing by the above that you believe home ownership is a good investment. I disagree and see it as a luxury purchase. Even with prices as low as they are right now, I think home ownership is a poor investment in most cases - assuming you purchase a home at market-value that is in good condition and doesn't require any major repairs.
In my area, you can rent a house for almost the same price as the mortgage would be for a similar house. However as a renter: no property taxes, costly repairs are covered by the owner, no maintenance costs, etc. Obviously there are downsides as well: don't own the home, terms to using the property, a lease, asking permission to change use of the land.
I read this article a few years ago and, granted, it's from before the economy blew up. I still think many of the points are very applicable today.
Renting vs. Buying: The Realities of Home-Ownership
Everyone, please keep in mind that all of the above is on a personal, case-by-case basis. It's not about what's best for the overall economy, but about individuals owning homes in general. I'm sure Jim in CT will dig up something I didn't think of though.