The benefits of homeownership are many, but not everyone wants to own a home or is ready to—and we should support that.
June is National Homeownership Month. It is part of an annual effort by the National Association of Realtors (NAR), the United States Department of Housing and Urban Development (HUD), the White House, mortgage lenders, nonprofit housing practitioners and others in the multi-billion dollar housing industry to promote the benefits of homeownership and its connection to the American Dream. It’s a noble effort, and as a licensed real estate agent and someone who works for a nonprofit supporting affordable housing practitioners, I appreciate that it helps me in my work. It means I don’t have to do a lot of work extolling the individual and societal benefits of homeownership. Between NAR and HUD, there is plenty of research and information showing how homeownership can: build long-term wealth, improve credit scores, increase family stability and positive outcomes for children and improve local communities.
However, as an advocate for policies and programs to financially empower and protect low- to moderate-income families, I do wonder how these messages may be over-selling (no pun intended) homeownership to people who are either not ready, or just do not want, to be home owners. Don’t get me wrong, I believe homeownership is a sound financial decision for a great many people. There is no better feeling than to help a family buy their first home. But if you are not ready financially, or capable of managing the very real responsibilities that come with home ownership or just simply don’t want to be a homeowner, than instead of being a dream, becoming a homeowner can be a nightmare.
In my opinion, the single greatest challenge for first-time home buyers is grasping both the initial financial commitment to buying a home and the ongoing costs associated with homeownership. On the front end, buyers need to have enough liquid cash to cover the down payment (which in many cases is 3-5% of the purchase price) but also another $350-$500 for an inspection and closing costs that can be an additional $1,000 – $3,000 (or more). And while there are some very good down payment assistance programs offered through MSHDA, some cities and even some banks to assist with the down payment, I know that when a person becomes a homeowner, it never seems to feel like there is enough money to take care of everything you want to do. On the fun side, it is having enough money to paint and decorate the home to your liking, or update the kitchen with nice, new appliances you get to pick out. On the not-so-much fun side, it is having to pay to fix a clogged drain, or replace non-functioning windows, patching a roof or replacing gutters (because who, ever, is excited about spending $300 on a plumber to snake a drain or $5,000 to a contractor for a new roof). These are things that, as a renter, you typically do not have to pay for if there is a problem. And these are costs that you may incur in addition to your monthly mortgage payment and monthly utility costs.
In addition to the financial costs are the responsibilities of homeownership. When you own a home, you are responsible for making sure your property is adequately maintained. From taking care of peeling paint, to keeping the grass cut, to keeping squirrels or mice from getting in, to maintaining your furnace and air conditioner, to putting up storm windows and fixing torn screens, to shoveling the sidewalk and driveway in the winter, to keeping weeds at bay, to cleaning the gutters… there is no end to your “to-do” list when you own a home. And make no mistake, these are not things that are done just to make your house look good for other people. Most townships and cities have weed and lawn ordinances, or require snow to be cleared from the sidewalk. Not dealing with an overflowing gutter can lead to water getting in the basement, or the soffit getting damp, which can lead to squirrels making a nest in your house, or wood-destroying insects exacerbating the issue. This will lead to more expenses, and if you don’t have enough money in savings then you can begin to become house poor—and not because you are trying to “keep up with the Joneses” but because you are simply trying to keep up with your house.
Not everybody is in a place to be able to handle both these financial obligations.That’s why there are homebuyer education classes and places like the City of Lansing’s Office of Financial Empowerment. These are places for people who want to own a home, but are not yet ready to become ready. Making sure people know about these resources should be part of the National Homeownership Month push. But for those who just don’t want to be homeowners and for their own, very good reasons don’t want to take on the obligations and responsibility, that needs be be OK, too.
Being a renter is not inferior and does not preclude you from the American Dream. I know renters who truly are living the dream. The real issue, at least to me, is that we need to ensure that everyone has a clean, safe and affordable place to live. We need to make sure that we are promoting policies and practices that increase the quality of life of everyone in the community, while also ensuring that those working in lower-wage jobs are not priced out of safe and clean neighborhoods. It is already happening, all across the country. And while things may be better, statistically, in Michigan, when compared with California, or New York, statistics don’t really matter to a widowed or divorced mother of two school-aged children who works two or three low-wage jobs with no benefits and still struggles to afford a two bedroom apartment in Grand Rapids or Detroit or Harbor Springs.
Simply put, whether by choice or circumstances, and despite the very real benefits, homeownership is not, and never will be for everyone. For those that aspire to homeownership, we need to make sure we support programs and policies that help build wealth, increase income, educate and protect consumers on predatory financial practices and improve the quality of life and communities in which everyone lives. For those that do not aspire to own a home, while many of these same policies will benefit them as well, we also need to make sure we support affordable rental options and realize that the American Dream can be opened with both affordable house and apartment keys!
Ross H. Yednock is the program director of the Michigan Economic Impact Coalition at CEDAM. He is also a licensed real estate agent in the State of Michigan.