Editor: Crass Cash
For those of you who have studied economics, you hopefully remember the latin term "ceteris paribus" which means, assuming all else constant. This is the go to phrase for economics professors who teach markets and the outside forces that impact them. With that said, there is always outside forces that impact markets. And none greater than the government.
Here's a list of outside forces that the govt imposes in order to promote home ownership.
1. Subsidized interest rates through the securitized mortgage market of Fannie Mae and Freddie Mac.
2. Tax exemptions of $250k (single) and $500k (married) for capital gains on your primary residence.
3. Mortgage interest deduction on your tax return if it's higher than the standard deduction.
4. Depreciation for rental real estate.
5. Govt subsidized down payments for FVA, FHA, and low income owners. If you qualify you can get ultra low down payments with no PMI since the mortgages are secured by the govt.
All of this, in one way or another, costs the American tax payer money. They do this in order to help out the "whole of society" and to promote the housing industry. Long gone are the days where people treated their house with the same as another asset. Take out a loan and pay it off as soon as possible!
Now the govt encourages you take out as much debt as possible and hold it for as long as possible. The idea of buying a home to fit your needs no longer applies. As a result homes as become much bigger, the prices much higher, and debt burden even greater.
For a similar perspective on this I'd recommend the following article: http://finance.yahoo.com/news/america-s-housing-policy--the-definition-of-insanity-145304611.html
Here's a list of outside forces that the govt imposes in order to promote home ownership.
1. Subsidized interest rates through the securitized mortgage market of Fannie Mae and Freddie Mac.
2. Tax exemptions of $250k (single) and $500k (married) for capital gains on your primary residence.
3. Mortgage interest deduction on your tax return if it's higher than the standard deduction.
4. Depreciation for rental real estate.
5. Govt subsidized down payments for FVA, FHA, and low income owners. If you qualify you can get ultra low down payments with no PMI since the mortgages are secured by the govt.
All of this, in one way or another, costs the American tax payer money. They do this in order to help out the "whole of society" and to promote the housing industry. Long gone are the days where people treated their house with the same as another asset. Take out a loan and pay it off as soon as possible!
Now the govt encourages you take out as much debt as possible and hold it for as long as possible. The idea of buying a home to fit your needs no longer applies. As a result homes as become much bigger, the prices much higher, and debt burden even greater.
For a similar perspective on this I'd recommend the following article: http://finance.yahoo.com/news/america-s-housing-policy--the-definition-of-insanity-145304611.html
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