CONVERSATING ABOUT WHAT'S ON YOUR MIND!
By LC DeVine and Lacino Hamilton
It hasn’t been that long since the housing market crashed. A calamity which still threatens the U.S. financial system. However, if you depend on mainstream media to keep you informed, you would not know this. Not the way the press has moved on to more pressing stories, such as the murder of Trayvon Martin. And if steroids are or are not still in baseball.
Truthfully, even when the housing market crash was the hot topic, it was never explained. What was so important about bricks, mortar, plumbing and wiring? Or what was so important about their architecture, layouts, proximity to schools and supermarkets. But I will let you in on a secret economists, pundits and commentators seemed to always forget to share with the public: Houses are the only way for average everyday people to keep up with inflation.
We often hear about some little known or obscure subsidy, or tax break, or exemption for the rich and wealthy. Home ownership extended such benefits to just about everyone. First, if you purchase a house you can deduct the interest on the mortgage. Second, you can deduct the real estate taxes you pay. Third, if you ever sell the house at a profit, and purchase another house, you do not have to pay a tax on the profit. And finally, the most important of all benefits, you build up credit over the years, called equity.
Some say it is stagflation that owning a house helps you keep up with, and not inflation. That is an argument without end. Everyone knows that, what could be purchased with a dollar a year ago, cost a dollar and a half, or sometimes two dollars today. Over the last thirty years the dollar has slowly been losing its purchasing power. Resulting in the rich and wealthy fleeing the dollar. They have done this by investing in real estate.
Now when average, everyday people think of real estate they usually think of a house. But when the rich and wealthy think of real estate they think of bridges, industrial complexes, roads, shopping centers, and entire subdivisions. Since average everyday people cannot afford to invest in such large projects, they are encouraged to aspire toward home ownership.
There was no denying the housing market crash was a detriment, but how perilous of a detriment never made its way into the dialogue. The housing market was the last refuge for average, everyday people against the shrinking value of the dollar. A way to borrow now and pay later and still profess to won something that will supposedly appreciate with time. The housing market is the measure for rises and falls in the middle and lower classes.
So what exactly does it mean that the best investment for average, everyday people is no longer a house? And why has this historical measuring stick been removed from the dialogue? The way the media has moved on, you would think everything is under control. But it isn’t. Not only does parts of Detroit– and other urban cities–resemble war zones, but people who once owned homes are finding it increasingly difficult to pay rent. Just because the media has moved on, does not mean the problem has been solved.
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