home ownership

Greg Nowell GN842 at CNSVAX.Albany.Edu
Fri Oct 23 10:03:32 PDT 1998

As an apartment dweller for 25 years, homeownership has been a great boon for reasons Paula mentioned. The amount we put down was 5% LTV (loan to value) but the additional fees and moving, and "the stuff you get" when you buy a house (washer dryer) added up to about 15% total outlay to get into the door with key in hand. Nonetheless it would have taken several years more if we had had to amass 20%.

One of the options that comes with ownership is the opportunity to lower costs. In the year we have been there we have refinanced the mortgage, put gas appliances in where there was electricity (on the dryer, the stove, and the upstairs bedroom), put automatic computerized thermostats on the wall. Thus our monthly outlay to be "in the house" has declined by about $250 a month over our initial estimates, only, less than half of which is atributable to the mortgage refinance. In all my years of renting I never once figured out a way to pay *less* to occupy the same space. These savings are equivalent to a substantial cost of living raise. For those who are curious, the computerized thermostats alone (which turn everything down when we're not around) brought the utility bill down about $50/mo.

On the downside, I am a de factor farmer and harvester of biomass. Unless you like to harvest biomass I advise a small lot. We have a half acre and I think it's too damn much. 850 gallons of leaves on the curb just last weekend. We have many trees. Things fall down. Branches. Pretty but a pain. There's something to be said for "letting it all go wild" but there is the question of neighborly relations.

Also on the downside are property tax increases. Not just the usual take-care-of-the skools but the "fight with capital" stuff. GE is a big landowner in our town and is using its high powered lawyers to contest its assessment. This could take $700-$1000 a year out of the pocket of yours truly. GE appears to have bought off the town council as they are signing off on the deal. That's what I suspect, anyhow.

The tax advantages are humongous. While it is true that interest costs alone might not get one to the 2% deduction threshold, combined with the property taxes, you do get there. In this area the taxes are about $3500 for a $100k property, maybe a bit less. And in the long run it is a form of saving for retirement.

Still, all told economically there's no question we were better off in apartments. But that doesn't get into quality of life issues, like having decision making capability that electric stoves suck and it would be nice to get gas (for the cooking pleasure as well as the utility benefits). When you rent you're stuck with landlord's choices. For 25 years.

What is interesting is the inability to introduce tool socialism. Everyone slugs away harvesting biomass with bad equipment when, if we pooled, we could buy sojmething together that would make all our lives easier. I have raised the issue but there are not takers. Worries about who will take charge of maintenance, what happens if something breaks while in use, accidents, etc. Definitely a perfectt environment to favor consumerism.

-- Gregory P. Nowell Associate Professor Department of Political Science, Milne 100 State University of New York 135 Western Ave. Albany, New York 12222

Fax 518-442-5298

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