70% of American own homes, 65% are invested in stocks and bonds!

[Pure]

yes, it's a tricky measurement, box. but, on balance, I favor a definition relative to the present society, not to the cave man or the Bolivian peasant with a dirt floor, or the US society of a hundred years ago. i don't wish to deny absolute gains, but the whole picture has to be examined.

however it's also appropriate to look at which necessities can be afforded, e.g doctor's visits. in that sense, the US poor are certainly way better off than in the Republic of the Congo.

'assets' is also a good measure, in that lots of people have essentially zero (overall).

there are 'almost necessities' in some US areas, e.g. car access; i believe I gave some stats on that.

---
another good concept is 'disadvantage' --iow, what percent of kids have a really dismal future prospect, even in the US---e.g., not complete HS, very low paying job, if any; likelihood of being on social assisance or in jail, etc. the early age at which the girl has her first child (e.g. under 16).



i think it's good to compare the US to advanced countries, not just Ruanda, don't you?

 

[Boxlicker101]

yes, it's a tricky measurement, box. but, on balance, I favor a definition relative to the present society, not to the cave man or the Bolivian peasant with a dirt floor, or the US society of a hundred years ago. i don't wish to deny absolute gains, but the whole picture has to be examined.

however it's also appropriate to look at which necessities can be afforded, e.g doctor's visits. in that sense, the US poor are certainly way better off than in the Republic of the Congo.

'assets' is also a good measure, in that lots of people have essentially zero (overall).

there are 'almost necessities' in some US areas, e.g. car access; i believe I gave some stats on that.

---
another good concept is 'disadvantage' --iow, what percent of kids have a really dismal future prospect, even in the US---e.g., not complete HS, very low paying job, if any; likelihood of being on social assisance or in jail, etc. the early age at which the girl has her first child (e.g. under 16).



i think it's good to compare the US to advanced countries, not just Ruanda, don't you?

Of course, and you did compare the US to "17 industrialized countries" but you didn't say which ones you meant. I would assume you mean Japan, maybe Taiwan and South Korea, and what is usually referred to as "the west". You said the US has more poor people than any of the others. That's logical. The US is by far the largest of the group being conpared.

I'm not comparing modern US society to that of 100 years ago. I compared it to that of 60 years ago, which is more comparable. WW2 had just ended and the US was on its way to being a highly affluent society, but they were not, in general, as well off as people are today.

 

[amicus]

"...70% of American own homes, 65% are invested in stocks and bonds!

--------------------------------------------------------------------------------

Just heard that on Fox Biz news and it somewhat startled me...as the numbers back in the 1970's were much smaller, 15% in the market...(Pure, get your own stats, just heard this)..."

~~~~~

That is the first part of my original post, the rest was just a jab in the ribs at social democracies...


Pure never disappoints, almost as consistent as I am in a totally different way, ya gotta love that...

Somewhat amusing in a curious way....some responders, sensing I was bragging, and I was, about the American economy and the success of it...quickly provided stats that the European social democracies equalled the American achievements; I took those numbers at face value, even though I thought private land ownership in Europe was at a minimum and that taxation was so high that people could not afford long term contractual mortgages...I thought, well, perhaps I am mistaken about that...

Then along comes Pure in usual fashion, attempting to kick the legs out from under my assertions that Americans owned their own homes in large numbers and participated in the capitalist investment market in a larger way than ever before...and of course, Pure attacks that also...as is 401 K's are some kind of scam.

What would happen, I wonder, if Pure applied that same cherry picked stats to Europeans? Ah, but of course, he would never do that on purpose....but in effect did so by assaulting what I had heard on the news...and I did make an effort to mention that I had 'JUST' heard it....and all of a sudden I am a Rush Limbaugh fan...egads...

I have been a disk jockey, playing music on the radio and then a newscaster and then a talk show host and moderator, a normal progression, even General Manager and Program Director for various radio stations...but with the advent of CNN cable news, which used to be a 24/7 news sources and following Desert Storm and then all the elections and then 9/11 and the current war in Iraq, I keep the news channels going all my waking hours...sometimes while sitting on my bony ass pounding on a keyboard writing the stories you love to trash.

So, yes, I listen to the news compulsively...all the news...but in recent years, with Wolf Blitzer on CNN...I simply cannot stomach the continual left wing barrage of tainted news. Fox is almost worst in a way in their perverted attempt to be 'fair and balanced' they dilute the news with innane (hannity and Colmes) or terrible, Greta Van Susteren, female viewpoint, or showboat O'Reilly whom I cannot stand...so...I really feel betrayed by cable news channels, MSNBC has nothing and Aaron Brown was fired from one of them, so I seldom venture out of mainly Fox, with a foray into CNN, just for old times sakes...

I said up front that I did not research and verify the statistics I quoted...it was presented as 'news' and not opinion and I accepted it as such...I note that Pure's numbers pretty well match what I heard, except he muddled it for his own purposes...as he usually does anything rational.

Home ownership, as opposed to renting, has many advantages, where it be manufactured housing or standard construction...one does gain a sense of security and a relief from landlords...the rent, the rent...there is also an equity viewpoint which one poster mentioned...at least the 'rent' money is not just gone forever...it also affords the homeowner with a sense of responsibility for care and maintenanceof the property, I have owned several homes along the way to here and one tends to feel pride in owns possessions.

Ownership was, not long ago, only vested in the wealthy, as was the expertise and investment capital necessary to became a serious investor...but the word got out and the percentage of wage earners who own stocks and bonds has steadily increased over the years and made more and more people feel a true part of a growing and expanding free market economy...which also teaches efficiency and ethics, should one care to observe...

anyway....thanks for the comments...


amicus...

 

[sophia jane]

There are a couple of things that bother me with these home ownership numbers. First off, because I would like to "see" them for myself so I can evaluate the data. Was this based on a survey and the number is a guess based on the survey data of only a small sample of people? Or was this based on a census or IRS data? This makes a huge difference in the accuracy of such a statement. Amicus, I understand that you heard it on the radio and thus are not vouching for its accuracy, so I'm not accusing you of bad data- I just would like to see the originals.

The other thing is that the numbers seem really too high. In the inner city, for example, the percentage of home ownership is going to be so much lower than that, maybe around 10-20%. I understand that these kinds of numbers all average out, but still- to say that only 30% of Americans do not own their own homes is ridiculous. Where I live, in a fairly well off area with a relatively low minority population, rental properties are at least half of the housing, so it's not just inner cities that are dominated by rentals.

Anyway, very suspicious of such high numbers. It seems likely to me that the sample of this was skewed to disclude minorities or the poor.

 

[neonlyte]

There are a couple of things that bother me with these home ownership numbers. First off, because I would like to "see" them for myself so I can evaluate the data. Was this based on a survey and the number is a guess based on the survey data of only a small sample of people? Or was this based on a census or IRS data? This makes a huge difference in the accuracy of such a statement. Amicus, I understand that you heard it on the radio and thus are not vouching for its accuracy, so I'm not accusing you of bad data- I just would like to see the originals.

The other thing is that the numbers seem really too high. In the inner city, for example, the percentage of home ownership is going to be so much lower than that, maybe around 10-20%. I understand that these kinds of numbers all average out, but still- to say that only 30% of Americans do not own their own homes is ridiculous. Where I live, in a fairly well off area with a relatively low minority population, rental properties are at least half of the housing, so it's not just inner cities that are dominated by rentals.

Anyway, very suspicious of such high numbers. It seems likely to me that the sample of this was skewed to disclude minorities or the poor.

US Census Data puts home ownership at 68.7% (2nd Qtr 2006) with some regional variation (64.7% West - 72.5% Mid W). Suprisingly, it has been a slow growth from 63.4% in 1965 - a 5.3% increase in 40 years. Of course, one must allow for families not included in census data but even they cannot be much more than 5%.

 

[Liar]

Another thing that struck me about all this: Why is owning your home a good thing and renting it a bad one?

Buying a home is to purchase goods. Renting a home is to purchace a service. Why is one consumer choice less good than another?

 

[sophia jane]

Another thing that struck me about all this: Why is owning your home a good thing and renting it a bad one?

Buying a home is to purchase goods. Renting a home is to purchace a service. Why is one consumer choice less good than another?

Because of equity and tax breaks and all that. I have no problem, personally, being a renter. I'm living in a house I'd never be able to afford to buy, in a neighborhood I couldn't affor either, so for me, renting is a great option.

 

[Pure]

so what's new?

amicus: I said up front that I did not research and verify the statistics I quoted

no refs, no urls, "I heard it on Fox". same old, same old.

same squishy sound. amicus rotating on his own thumb, a broken record of "Me Love Freedom; You Collectivist, Love Slavery."

===
amicus [pure was] attempting to kick the legs out from under my assertions that Americans owned their own homes in large numbers

P: actually i cited and referenced figures pretty much supporting Ami's (Fox's) overall US figure, but brought some additional figures to bear, e.g, on mobile ('manufactured') homes, because of the likelihood of dying there for a number of reasons, e.g., hurricanes like Katrina.

 

[neonlyte]

Just heard that on Fox Biz news and it somewhat startled me...as the numbers back in the 1970's were much smaller, 15% in the market...(Pure, get your own stats, just heard this)
amicus...

Wasn't at all suprised by the 70% claim - the 15% in the 1970's is plain wrong and an attempt to distort growth in home ownership or a simple error. 1965 US Census Data cites 63.4% nationwide home ownership.

What would be the purpose in deliberately misrepresenting the growth? Over 40 years I would have the thought the political parties pretty evenly divided - where was the advantage?

 

[Boxlicker101]

Wasn't at all suprised by the 70% claim - the 15% in the 1970's is plain wrong and an attempt to distort growth in home ownership or a simple error. 1965 US Census Data cites 63.4% nationwide home ownership.

What would be the purpose in deliberately misrepresenting the growth? Over 40 years I would have the thought the political parties pretty evenly divided - where was the advantage?

I think he meant that only 15% owned stocks or bonds. That's what would be meant by "in the market". That growth would be, I believe, mostly the increase in 401K accounts and pension funds, which are invested by the fund managers in securities.

 

[matriarch]

Now, don't go letting it get to you head, Ami. Let's remember two things: first that home ownership includes condos. So those stats go very well with the fact that there have been a ton of condos built and coverted.

In my neck of the woods, for example, every other apartment building including some pretty small and rundown ones, has been converted to condos. I live in a one-bedroom "apartment"--but I own it. So I'm a homeowner. There are a lot of "apartment" dwellers who are "home owners" thanks to conversions.

In other words, I think you're making a mountain over a molehill. That 70% do not, as the 50's dream would have it, live in beautiful suburban houses on nice clean streets. By the way...do trailers count also?

Second, one should remember that few Americans own their homes outright. Most of those Americans are paying huge loans. And many, many, many of them will lose those homes when they can't pay off those loans.

Really, it's the banks that own those homes. Americans just rent them...unless they can manage to pay off a 15-30 year loan, which, alas, many can't.

Don't trust statistics, Ami. And learn a little humility. Those who crow too much and boast about their accomplishments--especially if those are misleading and exaggerated accomplishments--don't get to play with others during recess.

Exactly.
The wife just pointed out this article to me....puts it all in a very real perspective, don't it??

 

[matriarch]

Because of equity and tax breaks and all that. I have no problem, personally, being a renter. I'm living in a house I'd never be able to afford to buy, in a neighborhood I couldn't affor either, so for me, renting is a great option.

Same here.

 

[ChilledVodkaIV]

Exactly.
The wife just pointed out this article to me....puts it all in a very real perspective, don't it??

Extremely amusing and one of the best and most effective methods of deflating pompous, high moral grounders. It makes them think, but we all know they won't.

 

[Pure]

adding to matriarch,

nice posting. the figures on household debt are incredible; the report below rings true.

interesting report on the growth of consumer spending and household indebtedness


http://www.marubeni.com/dbps_data/_material_/maruco_en/data/research/pdf/0407.pdf

marubeni is a large, diverse, Japanese corporation.

US. and World's Household Debt



Record Household Debt Has Driven Consumption (Or Has Consumption Driven Debt?)

Which brings us to the crux of the matter; if business spending didn’t spur U.S. household consumption, what did? Obviously there are two sides to every coin and the other side of U.S.personal consumption onslaught is heaps of household, or consumer debt, egged on by record low interest rates. Household debt in the U.S. (and as you will see in many other countries as well) has ballooned.

In 1950 U.S. household debt to disposable income, basically after-tax income, was 34% (if disposable income was $10,000, households had $3,400 in outstanding debt).

This figure grew to 58% by 1960 and levelled off eventually reaching 69% in 1980. As of the end of 2003 that ratio stood at 115% and rising. This means that the outstanding debt on a disposable income of $28,400 (the current U.S. per capita average) is now $32,660 (for every $10,000 of disposable income, households now have $11,500 in debt).

Pace of Household Debt and Personal Consumption Has Exceeded Growth of Disposable Income

It is not just that household debt now exceeds disposable income in the U.S., it is that the pace, or trajectory, has accelerated since 2000. The ratio of household debt to disposable income increased by 24% from 1950 to 1960, from 1993 to 2003 it rose by about 30%. However, there is a big difference in the two figures. From 1950 to 1960 the actual amount household debt increased every year never surpassed the amount disposable income increased.

This began to gradually change by the 1990s. Household debt increased on average 7% per year from 1990 to 2000, while disposable income rose 5.2% a year.
However, from 2000, debt growth of 10% per year was double income growth of 5.1%. During the last 3 years total household debt increased by about $2 trillion, about the size of the entire economy of Germany, while disposable income rose by $1.15 trillion.

If this weren’t enough, not only has the growth of household debt exceeded the growth of disposable income in the U.S., but since 1990 personal consumption growth has exceeded disposable income growth as well.

Propensity to Consume Takes Off

A valid question might be whether consumption, or the propensity to consume (the amount spent on consumption vis-à-vis one’s net disposable income), is driving household debt or household debt is driving consumption? One thing is without question and that is the propensity to consume rose dramatically in the 1990s in comparison to historical standards.

Between 1970 and 1990 household consumption average about 88% of net household disposable income (the propensity to consume is thus .88) and historically has never been above 90%.

However, it has risen about 6% since 1990 and is currently a bit above 94%. While it might be argued that a new type of driven consumer is behind the increase in consumer debt, the fact is that using 94% of one’s income for personal consumption doesn’t leave a lot of room to pay back debt or save for the future.

Home Mortgages Driving Household Debt

The increase in household debt over the years can be attributed mostly to the huge increase home-related mortgage debt and to a lesser extent pure consumer credit. Mortgage debt has increased from about 40% of disposable income in 1970 to 60% in 1990, to about 83% as of 2003. Consumer debt rose from about 17% of disposable income in 1960 to 25% in 2003, most of the difference coming from the latter half of the 1990s.

Of the nearly $6 trillion rise in household debt between 1990 and 2003, home mortgages made up 74% and consumer debt 22% (4% other). During the last 3 years home mortgage debt has been growing at about a 12% clip (as mentioned a total of nearly $2 trillion, including 2003).

--
6
Gap Between Mortgage Debt Growth and Disposable Income Growth Has Widened

While these are high rates of debt growth, they are not historically the highest (the amounts are though). The problem is that the gap between mortgage debt growth and disposable income growth continues to widen. Just between 2000 and the end of 2003 mortgage debt growth climbed nearly 40%, while disposable income rose only 16%.

Much of this mortgage increase can of course be attributed to the rise in house sales. And, while house ownership growth is not at its historical peak (it nearly is), the sheer numbers are (around 10 million since 1998) and ownership rate is (68.6%). Still, the fact that house buyers take out more loans than in the past, (mortgages on house sales have risen from around 82% as late as 1990 to 93% today) and the fact that mortgage amounts are growing larger (higher average house prices and lower down payments) are also contributing to the rise.

 

[ChilledVodkaIV]

Some interesting parallels

 

[neonlyte]

I think he meant that only 15% owned stocks or bonds. That's what would be meant by "in the market". That growth would be, I believe, mostly the increase in 401K accounts and pension funds, which are invested by the fund managers in securities.

Thanks Box - I'll pay closer attention.

Good stuff being posted Mats / Pure and others - interesting to see the context.

 

[Liar]

Same here.

Yep, for me too.

I rent an apartment, I rent a TV, I co-rent an office, I rent my cell phone along with the net service. Later on when I need wheels again, I'll probably lease a car.

It gives me easily controllable montly expenses regulated by contracts. I know what I pay for stuff and there are no "hidden" costs that comes with owning, like repairs and decerasing value due to wear n tear, separate insurance et al. All that service is included in the price...and it's STILL cheaper for me than the owning would be since the people I rent from have large volumes and can negotiate price better with their subcontractors. Free market in full bloom, baby. Plus, I'm not in debt. Not to a bank, not to anybody. I kind of like that feeling.

So, no, what I asked was not why it might be practically better to own than to rent (when it comes to homes, I guess it might give you security if your landlord is a crook and your contract leaks). But rather, why it is seen as morally or ideologically better? Why does amicus cite (and we all seem to agree) a high percentage of home ownership as a mesure of success? Isn't it just one consumer choice over another?

 

[sophia jane]

So, no, what I asked was not why it might be practically better to own than to rent (when it comes to homes, I guess it might give you security if your landlord is a crook and your contract leaks). But rather, why it is seen as morally or ideologically better? Why does amicus cite (and we all seem to agree) a high percentage of home ownership as a mesure of success? Isn't it just one consumer choice over another?

I think, and I can only speak for Americans and only speculatively, it's because owning one's home is a sort of status symbol, a sign of wealth and prosperity. Realistically, as the article Mat linked shows, being in debt for $200,000 isn't actually a sign of wealth, nor does it particularly bring about prosperity or security, but it is definitely a status thing, and so such high numbers would indicate, to those who subscribe to the theory, that the American economy is booming, that more people have greater wealth, that capitalism is a success.

I personally find the levels of debt and consumer spending alarming, even as I contribute to it. How can we claim successes of the American economy with such a high debt rate and such high bankruptcy rates??

 

[neonlyte]

Speaking for the UK, the rental of property - certainly in most of Southern England - does not make economic sense. I live about 25 minutes from London, commuter territory, a 2 bedroomed house costs £900 - £1,000 per month to rent. Buying the same house would cost substantially less with a mortgage.

In the UK we have grown used to accelerating house prices. Strict planning conditions create a land shortage, supply outstrips demand, house prices increase. People 'feel' wealthy because the value of their home is increasing. This is an illusion, you only actually gain if you can buy something cheaper, in most areas that is not possible unless you trade down in size and 'status'.

The illusion of wealth is perpetuated by the ease of releasing 'surplus equity' - ie. borrowing more money from the bank or mortgage company - and treating yourself and family to holidays, cars, luxury goods. When your 'mortgage' the loan, the money is cheaper then unsecured bank borrowing - but it is still borrowing and still increasing debt. A significant part of the UK economy is underpinned by the mirage of 'wealth' in bricks and mortar, few people stand back and look at their debt and consider the wisdom of borrowing more, or any. With rental prices so relatively high, most have no option but to buy, thereby increasing and underpinning market prices.

 

[R. Richard]

I have talked to a number of people about owning a home versus renting. I have come up with what I think is interesting information.

1) You have to live somewhere and the choices are rent or own. [OK, some people live under bridges and the like, but it aint the good life.] If you rent, you are paying for someone else to own your home. If you own, you are paying for you to own your home.

2) Several of the people I talked to had interesting facts. One guy has owned his home for 22 years. The "enormous mortgage debt" of something like $100K is now paid off. Oh yes, the home is now worth something like $450K. In the process of buying the home, the guy just had to put up with taking the mortgage expense and the property taxes off of his income taxes.

3) Of course, there is the problem of home repair. One guy I know just put a new 50 year roof on his house at a cost of nearly $12K. Of course, the house gained some $75K in value over the year.

4) From my very inadequate survey, the people who own their own home do better financially than those who don't. This last is not surprising, since home ownership is a sort of forced savings plan.

5) Almost everyone I talked to hated "the dreaded yard work."

 

[SweetPrettyAss]

I think, and I can only speak for Americans and only speculatively, it's because owning one's home is a sort of status symbol, a sign of wealth and prosperity. Realistically, as the article Mat linked shows, being in debt for $200,000 isn't actually a sign of wealth, nor does it particularly bring about prosperity or security, but it is definitely a status thing, and so such high numbers would indicate, to those who subscribe to the theory, that the American economy is booming, that more people have greater wealth, that capitalism is a success.

I personally find the levels of debt and consumer spending alarming, even as I contribute to it. How can we claim successes of the American economy with such a high debt rate and such high bankruptcy rates??

There is a certain prestige and a certain feeling of accomplishment in owning a home, which is why it is sometimes referred to as the American dream. Being in debt for $200,000 is not a sign of wealth by itself but owning a home worth more than that means more net worth, especially in an expanding economy when the value is appreciating. A person or family buying a home usually pays more in mortgage payments and property tax than does a renter but the mort. interest and tax is deductible on income tax returns. Rent is not. As a ballpark figure, figure 25% of the tax and interest is returned in the form of lower income tax. It may be more than that because if you have these things to itemize, other items such as medical expenses and contributions may also be deducted. Such things would always be deductible, but they might not total enough to be worth doing.

Besides that, real estate is a valuable asset and can result in lower interest rates on credit cards and can be used as collateral if a loan is needed to raise money. If a property owner is arrested, they stand a better chance of being released on their OR than a renter. Failing that, the home can be used as a property bond to gain release, without resorting to the high fees charged by bondsmen.

As for yard work, you are going to do that whether you buy or rent a home.

 

[amicus]

This discussion has taken several interesting turns aside from the purely political and set me off to thinking about the origins of property ownship and the intellectual history of such transactions.

There are many, many sources to choose from, I read several and then picked the two whose links I provide below for no particular reason, save they were the least technical and easist to read.

http://www.sbs.utexas.edu/resource/onlinetext/Definitions/LandValue.htm

http://www.futures.hawaii.edu/dissertation/TOC2.html

good luck...


amicus...

 

[Liar]

1) You have to live somewhere and the choices are rent or own. [OK, some people live under bridges and the like, but it aint the good life.] If you rent, you are paying for someone else to own your home. If you own, you are paying for you to own your home.

Uh. He already owns it. I pay for him to provide me with a residence. If I buy, I have to invest in buying the actual walls, floors and lot, but I get a residence for free. It's not much more of a difference than between building a house on your own and hiring a contractor to do it.

2) Several of the people I talked to had interesting facts. One guy has owned his home for 22 years. The "enormous mortgage debt" of something like $100K is now paid off. Oh yes, the home is now worth something like $450K. In the process of buying the home, the guy just had to put up with taking the mortgage expense and the property taxes off of his income taxes.

3) Of course, there is the problem of home repair. One guy I know just put a new 50 year roof on his house at a cost of nearly $12K. Of course, the house gained some $75K in value over the year.

Yep. Owning estate can be a good investment. And in most places, it is. Houses has on average a better market growth than inflation and cost of maintenance. OTOH, there's risk, unforseen events that can tank your propery's value. My mom's boyfriend had a bad run with water damage, an incompetent renovating company, piles of paperwork needed for building permit hooplahs, insurance and financing, and not enough time to deal with it. Got set back some 100k, and five years later he still have tax issues to clear up. Bad luck? You bet. But it's a risk that one should be aware of.

I don't have the prospect of a growing investment anymore. But I still have a quality home, with risks like that eliminated.

 

[Liar]

5) Almost everyone I talked to hated "the dreaded yard work."

That's why, when I get filthy rich, I'll choose the penthouse instead of the mansion.

 

[Pure]

i remember an article some time ago about own v. rent: with a little juggling of figures, the thing came out a dead heat: provided--the 'down payment' that the renter saved was invested, and provided that the renter saved and invested each mo.

the other factor is that the gains of real estate are sometimes miscalcuted. for instance, someone buys for 100,000 and sells 20 years later for 300,000. It sounds enormous, but it's less that 6% per annum compounded monthly. Further the maintenance of a house is at leat 1-2% a year by many estimates. Taking the lower figure, that's $1000 per year on this home just mentioned.

it is true that US homeowners, unlike most others, get to deduct mortgage interest; this would be a huge gift from the governement to the banks, that of course skews the calculation.