Submitted by smurfyjenkins t3_y9veul in science
Reply to comment by auntiepink in Many countries have a "hidden welfare state" for incumbent homeowners, as governments subsidize homeowners through the tax system. The homeownership welfare state is strongest in the US and other Anglophone countries, but weakest in the Scandinavian countries. by smurfyjenkins
It’s just a problem from a societal standpoint that people with less money than you, have to pay more for housing because they can’t afford to own. So that benchmark of wealth needed to be a homeowners becomes a class divide. And the stronger those programs are the worse the divide becomes.
I bought my house in 2013 because I had enough in my starbucks 401k to make a down payment on an FHA loan. I only even considered this because I couldn't afford to rent a 1br apartment in my area, but I could afford a $700/mo mortgage.
Could you explain how poor people are paying more for housing compared to someone who buys a house?
When a person buys a house, and pays money into that loan, they are essentially paying themselves, as they accrue net value on an asset they can sell later. When a person rents a house, that money is just gone. There is no value return, you have essentially just bought the opportunity to live in a house for a period of time. Therefore, over time, the person that owns the house will have more assets than the person renting, even if they make the same.
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Renters are paying all the expenses for the property they live on, including the cost of maintenance that they could possibly be doing themselves, PLUS a nice amount of profit for the person that they rent from. Rent prices also don’t scale well in the lower range, so people are paying more for less.
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Aside from the loss of paying rent, we also lose in higher interest and insurance rates over those who can make larger down payments or buy outright and then rent back to us for the mortgage plus cost plus expenses and most importantly profit.
> buy outright and then rent back to us for the mortgage plus cost plus expenses and most importantly profit.
Saying that you pay more because someone else makes a business out of it is like saying that walmart makes more money cause it buys stuff in bulk then sells it to you at an increased price. Thats not really an argument but more like a method of making money.
>Aside from the loss of paying rent
But when you pay rent, you don't have to pay for repairs and maintenance. Heck, sometimes the utilities are included into that rent. Much cheaper than spending $20,000 on a new roof. Or paying $9,000 in taxes per year.
>we also lose in higher interest and insurance rates over those who can make larger down payment
The interest rates are based upon a system which is doing a person a favor. By loaning them money. It's not "Poor people pay more for a house", its more like "The more money you borrow, the more interest you'll have to pay". It doesn't matter whether they're poor or rich, the more money they borrow the more interest and higher rates they'll have to deal with.
Btw, a poor person can still get great rates if they have good credit.
And the solution: make it available to all income groups, eventually ending rental as a major component of housing.
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