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December 19, 2013 / Brandon

Government Aid, Housing and Engineering – B+W Engineering and Design Blog

Government Aid, Housing and Engineering #CivilEngineer

I came across an article talking about the government giving away more housing aid to the rich over the poor. http://ift.tt/1i2nwXD

The main reason for this is the majority of federal housing aid flows to homeowners, not renters. The mortgage interest deduction is the most well known program that subsidizes homeownership. That deduction alone is larger than all federal rental aid combined.

The main point seems to be for giving interest deductions for homebuyers. But if the country wants to encourage home ownership, are incentives so bad? We went from renting to owning. While renting there was only so much that we could do for improvements. Basically interior things that don’t harm the structure itself. When we bought the house we busted out the walls and redid things the way we wanted. Renting felt like a stepping stone to ownership. Is it possible we sell the house and rent again, certainly. And that goes along with most of our business. Developers building both places for sale and rent. They both make sense to build. Some people want to rent and some people want to buy. Owning land or a house on land is a big deal in this country. This dates back to who could vote. Its no wonder that the goverment would encourage people to buy as opposed to rent. This goes deep into the roots of this country.

I can come up with many pros and cons to renting versus owning. But the point of aid would be that someone is most likely taking out a long mortgage to buy a house. They may even pay cash. This person should be more likely, yes I live in a world of unicorns and fairy dust, to maintain and upgrade their property as they see fit. They may be living there longer than someone renting. And there is one simple reason why. The homeowner most likely will stay in their house longer than someone signing a 1 year lease. Of course this can go both ways as we were close to flipping our house and renting for a few years based on the profit. But like magic we have stayed put.

Fifty percent of renters now spend more than 30% of their income on housing. This has forced renters to cut back on other household necessities or live in inadequate units.

But then we now see where the problem might be. Rent is possibly higher than buying. I went through this same thing when we were looking to buy. Do we rent for 1 year and see what happens in the market or do we take the risk to buy with the housing market in turmoil. We decided to rent. Rent was a lot higher than buying at the time. I was surprised by this as that seems very backwards. When we signed the lease I started to pay closer attention to similar units that we could buy. Something seemed very off but it felt like if we rent, after the 1 year lease ends we can just jump out of the deal and go somewhere else. Seems easy enough. And then I really started looking at how much it would cost to buy compared to renting. Maybe this is the time to buy. So we looked and looked and looked and finally bought. I only used to gamble on the stock market, but I know to not try to time the housing market. Houses were priced lower than renting, incentives were there to help and we bought. Now what does that entail for everyone involved? For one very simple thing I know that our unit that we were renting was vacant for close to a year. No one made any money related to that unit. Something simple like utilities is all I will mention. But here we are in a house and when we decide to sell, the utilities will continue on most likely uninterrupted. Something very basic like that keeps the City and County going. But what else keeps going?

Renters are more likely to face a severe cost burden (defined as spending at least 50% of income on housing) than homeowners are. This is a result of rising median gross rent and falling media income over the past 15 years.

A house, condo, or whatever type of unit whether rented or owned is going to have costs involved to fix things. And fixing is something that we continually go through since our house is from the 30′s. I hope I am not in the minority, but when we fix something we fix it the right way. No mickey mouse here. But in the apartment, other means to fix issues might go on that are the cheap way out. Right there is more money out of our pocket to keep that economy in turmoil going for a day longer. We now have a bit more skin in the game since we need to be able to sell this house in the future and not lose our seed money. When we were renting it didn’t really matter what condition the unit was in.

These problems are only going to get worse as millions of seniors find themselves in need of rental housing in the coming decades.

Someone is trying to pull at heart strings here. Why would a senior suddenly only have the option of renting as they retire? This makes absolutely no sense. Either a senior owns their home outright or is about to pay their mortgage off. Or they have been renting and know how roughly how much their rent will pencil out to as they continue. Otherwise the senior couldn’t afford to retire in the first place. This may sound harsh and it probably is. But trying to say out of nowhere that seniors will be affected is a bit over the top and goes for the cheap thrills of mentioning that population.

Like I said above there are many pros and cons to renting and owning. Owning isn’t all its cracked up to be. I keep a separate blog purely about our house as we go through the motions of keeping it alive. I am for both, renting and owning, but I do agree with incentives for trying to sway people into buying over renting, as it almost doesn’t make sense to buy if housing prices stay stagnant. I don’t think this artificially does anything to housing prices or rent either.

So how in the world does this relate to Civil Engineering and our business? Well our projects fall into both categories. We are seeing a lot more apartments going up over the last few years. And still houses and condos as well as commercial properties are being developed. Thankfully overall there is more building going on.

The post Government Aid, Housing and Engineering appeared first on B+W Engineering and Design Blog.

http://ift.tt/eA8V8J
via B+W Engineering and Design http://bwengr.com/blog/government-aid-housing-engineering/

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