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Bob Dickson: Renters get the short end of the stick

Right Here Right Now

Posted: March 5, 2009 11:13 p.m.
Updated: March 6, 2009 4:55 a.m.
Let me say this as plainly as I can to all you renters out there. You are the illegitimate child of the U.S. economy – Always have been, apparently always will be.

If you are renting today — if you sat on the sidelines throughout the tulip-mania market that was the housing market since the late ’90s — the reward for your decade of forbearance has finally arrived in the form of a $75 billion mortgage bailout for everyone else.
As usual, the short straw is yours to hold. You just got stiffed.

For some reason, you didn’t buy a house in the last decade. Maybe you had bad credit. Maybe you didn’t plan to stay in the Santa Clarita Valley that long. Maybe you didn’t see a value to buying versus renting. Maybe you bucked the trend by actually weighing the cost of owning a home against what you earned and decided you couldn’t afford it.

And then housing prices ballooned. Low interest rates and even lower lending standards fueled a frenzy as multiple buyers/speculators routinely bid over the asking price for homes. If your income level locked you out of the market in 1997, the years of hyperactivity that followed threw away the key.

Since you owned no existing home to sell, buying in the early 2000s would have meant making a paltry down payment and assuming a jumbo loan. Your mortgage would have been unmanageable, despite all the encouragement from friends to take advantage of the creative financing and “get in now.” To you, that 1,500-square foot, three-bedroom duplex behind Granary Square simply wasn’t a bargain at $450,000. You believed a million-dollar home should come with an ocean view, not a view into your neighbor’s kitchen in Stevenson Ranch.

So, you waited. These crazy prices had to fall at some point, right? Somewhere you knew someone was overextended.

It turns out you were right. People were overextended, if not by the cost of their mortgage, then by the cost of the seconds and thirds they took out on the “paper equity” in the skyrocketing value of their homes. Your neighbors took vacation. They bought new cars. They added swimming pools and granite countertops. They sent their children to college. Meanwhile, you rented and saved.

Housing prices started declining last year, and this gave you a sliver of hope. Then, after the house of cards was exposed late last year, they tumbled. Your patience was about to pay off.

But no, President Obama decided it’s in the best interest of everyone to throw your neighbors a $75 billion lifeline. “We aren’t just helping homeowners who are at risk of falling over the edge, we are preventing their neighbors from being pulled over that edge, too,” he said.

Since the mortgage crisis came to light last year, our government has used the full weight of its power (and our tax dollars) to prop up housing prices. But exactly what “edge” are we talking about here?

When the value of a home returns to earth from the stratosphere, can we really say it fell off a cliff? If our government’s goal is to forestall a needed correction, then you, dear renter, remain locked out. And it’s your tax dollars making that happen.

Homeowners pay property taxes, but receive generous tax breaks on the actual cost of the mortgages that many are saying they can no longer afford. Renters enjoy no such consideration.

I’ve heard the counterarguments and they are thin. President Obama claims that what’s good for one segment of the economy will somehow benefit the rest of it. Unfortunately, this liberal version of trickle-down economics does not apply so readily to renters.

Renters don’t want stable prices when the values remain inflated. This only helps people who already own.

Besides, how much skin do most of these tapped-out homeowners really have in the game to begin with? How many “bought” with little to nothing down and paid interest-only notes?

And what of the supposed ‘psychological impact” inflicted upon families forced to vacate homes they can either no longer afford or refuse to pay for because they owe more than it’s worth? Any renter who’s ever endured a rent increase can tell you that moving for economic reasons beyond one’s control will not kill you or scar you for life.

Foreclosure is not the end of the world. Purchasers can walk away from a signed contract not be obligated to pay what’s owed. It’s a governmental form of grace for times like these. Why is it that homeownership is sacrosanct? The truth is the American dream is not home ownership. It’s being able to pursue your goals and dreams without undue and unfair hindrance. This includes hindrance from the government.

Bob Dickson, a 12-year Santa Clarita resident, is an award-winning journalist and former sports writer for The Signal. As the owner of Bob’s Word Factory, he writes for TV, radio, magazines and has been published in two books. Dickson is also an adjunct professor of writing at The Master’s College. His column represents his own views and not necessarily those of The Signal.


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