How the Renter-Investment Mentality Undermined the Ownership Society
We’re a nation of renters. Doesn’t matter whether you live in an apartment or what you think of as your own home. If you’re like most Americans, you’re a renter.
It used to be that owning your own home was part of the American dream. You bought–or built–a house of your own–a home in which you could raise your family. Possibly, your home would be passed along to the next generation, where your grandkids or your great grandkids would also grow up. Your house wasn’t just another building–it was your home.
Maybe you didn’t have enough money to buy a house outright, so you borrowed it. And, you borrowed that money with the intention of paying off the loan and having full ownership of your home. People celebrated the day they made their last payment–the house was theirs, free and clear. They owned it.
But, at some point, a house didn’t become a home anymore; it became an investment. It was something you could build value in and later sell when you retire to a smaller home or to travel the country or, in a growing number of cases, to fund your nursing home care.
And, the home lost its importance. It was your house, but it wasn’t so much a home anymore. We became more transient. Home could be anywhere we could display our knick-knacks. So, the house became an investment. And, to increase that investment, we would borrow against the house to make improvements to make that investment worth more.
Then, at some point, it didn’t matter to us anymore whether we would ever pay off the monies borrowed against the house. We could live the high life now; who cares what happens to the house and debts when we’re dead? Paying off the money we borrowed wasn’t important anymore. All that mattered was making the monthly payment. As long as we could make that, we were okay.
And, the banks were quite happy with that. They kept collecting more and more money from interest rates. And, if you stopped paying, they could seize the whole house and sell it. They were covered. So, they went out and started encouraging the renter-investment mentality. Borrow money from them to pay off your credit cards and do some home improvements. It’s a great investment.
For the banks, of course, since they were the real owners of your house, and your home improvements only served to increase the value of their property.
Paying off your debts didn’t seem as important anymore. As long as you could make your monthly payments, you could live high off the hog. Ownership didn’t matter anymore. In fact, many people didn’t even think about whether they would one day own their homes. All they cared about was how much house they could get for their monthly payment. Whether they would ever be able to pay it off didn’t matter. It was an investment, and they would still have equity even if they would never be able to own it entirely.
And, banks happily went along, giving loans to people they knew wouldn’t be able to keep up with payments long-term. All that mattered was those interest rates. And, they could always foreclose on the home and sell it if the people couldn’t keep up with their payments.
Even if you did your finances smartly, and managed to buy your own home and pay off all the money you borrowed and own your home free and clear, you’re still a renter. You may think you’re a home owner, but the politicians have found ways to keep you stuck as a renter. That way is, of course, taxes.
You can own your home free and clear, but you’ll still have property taxes to pay. Don’t pay them, and see how long you will continue to “own” your home. Nope, you’re still a renter. The politicians have undermined ownership too, sticking you with property taxes and other taxes that, if you don’t pay them, they’ll seize your house to pay them. In other words, if you don’t pay your rent (i.e., taxes), the landlord will lock you out!
On top of that, in a growing number of places, the politicians will seize your property if someone else comes along and offers them more rent, i.e., taxes. Like it or not, you’re a renter, and you only live in your home at the whim of local, state and national politicians. A developer might come along and think your home is a prime location for a strip mall. They’ll tell the politicians of all the sales taxes and business taxes and earnings taxes and so forth that they’ll get if they can build their strip mall. So, the politicians see dollar signs, and seize your home.
But, they’ll give you “fair market value” for your home. Mind you, that’s not what you’d be willing to sell your home for, if you wanted to sell it at all, but that’s what the politicians determine as a fair price for your home. And, who does the appraisal? The buyer controls the process. Or, rather I should say, your landlord controls everything, including determining the value of the house you thought you owned.
You’re a renter.
And, many people are stuck in that renter-investment mentality. They don’t see a house as a home anymore. It’s just a building and, if they can get some bucks for that building, they’ll happily move into another one.
Many people don’t have any sentimental attachments to houses. Memories are enough. And, while it’s true that we shouldn’t get too materialistic, there is also something to be said for living in the same home that your parents, your grandparents or even your great grandparents grew up in. And, that’s something you can only achieve in any ownership society, like America once was.
You want to blame the people in Washington? Sure, they bear some responsibility, but they didn’t do anything the rest of us weren’t doing. They spent money they didn’t have; borrowed money they couldn’t pay back; and stuck someone else with the consequences when it all came crashing down. They didn’t have the ownership mentality anymore; they had the same renter-investment mentality they themselves promoted as well. These are people that, like many Americans, couldn’t balance their own checkbooks, but we entrusted them with billions of dollars. Of course, they had an advantage we didn’t have. When our wallets are empty, we can’t order the Treasury to print us some more money.
We once had a national desire for ownership. The American dream was never about borrowing your way to prosperity! It was never about spending your way to prosperity! It was about earning it! And owning it! We were an ownership society. We owned what we had rightfully earned.
But, now we’re a nation of renters. We sold our futures for some present day fun.
Arrgh - this post pisses me off because it is so true. And I have hated seeing condominiums going up everywhere and developments that look like little ghettos. Or there are the big cookie cutter McMansions that are always just a little too big for the land they are on. This is soooo NOT the dream of yesteryear.
Hey Dan- didn’t I just email you “who are you going to piss off next?”
Boy are you a fast worker.
It stinks!!!!!!!!!!
People live far beyond their means and want everything right now. America festers narcissism and greed. Now, in the most shocking revelation, the people demand socialism in a country that cannot afford it. Praise to Obama, saviour of the universe. Just wait until this clown gets in office and destroys all that’s left.
[...] I am certain I will see this in my lifetime. Dan from DCR blogs wrote an great article about the renter mentality so prevalent in our society. He’s right. Most people own less than 50% of everything in their [...]