Community Housing Market Support Network (CHMSN) Inc.
How do you understand the housing market in the United States?
The housing industry is financially engineered in the United States because it is the first need to consider before moving to live and work in any community. One may choose to buy a home for investment, negotiate leasehold for a number of years, or just rent monthly as a consumer. Many families are not informed about the differences though monthly rent or monthly mortgage payment may be the largest expense item in their families. It is public policy to leverage every American family buying a decent home for investment. Hence, a family or household with good credit could obtain low-interest long term mortgage loan up to 30 years. The monthly payment on such a loan could be significantly lower than the monthly rent for the same house. Monthly rent should cover the management and maintenance costs, as well as the monthly mortgage payment by the landlord. Therefore, a renter must be paying more! However, rental homes are commonly confused with homeownership because many low-income households are subsidized to rent under public housing programs. It is public policy to subsidize low-income households because many of them do not have good credit financially, and their incomes are below market prices of decent homes for the monthly mortgage payment. A landlord would rather retain ownership as long as the monthly rent covers all maintenance costs and monthly mortgage payments. On the other hand, renters are not usually informed about their landed property rights for housing. Adequate and decent homes are for households to invest for improved living conditions. A renter is paying the landlord to invest in the property. A renter with significant down-payment could negotiate low monthly rent for the duration of a lease agreement. That is, a tenant could negotiate to be leveraged by the landlord, though the practice is not common.
The principal portion of a monthly mortgage payment is like putting money into a savings account. One could pay more of the principal portion every month so as to pay-off the entire loan much earlier than the stipulated 30 years. One should avoid the temptation of borrowing against the equitable value being acquired as a result of those principal payments and the down-payment at purchase. It is like borrowing money from one’s deposit savings account. Rather, one should use home equity loan to pay off the principal portion of outstanding mortgage loan faster. It is critical to understand this homeownership investment strategy because a greater portion of mortgage loan is interest payment.
Hence, the nonprofit strategy for low-income families is to collaborate as investors in their local housing marketplaces. Such collaboration could take the form of a voluntary network of existing and prospective homeowners through the nonprofit organization. The organization will be helping collaborating households to manage various equitable values of their homes as mutual benefits. Thus, equitable values of their homes could be used to pay off outstanding loans while they pay the organization back without interest charges. The nonprofit private equity organization complements public policy in the housing market. The nonprofit community-based real estate management approach is explained by Odetunde, J. (2019). Housing every American family to ensure social justice. Beau Bassin, Mauritius: LAP Lambert Academic Publishing. The purpose is to help one another become homeowners, mutually protect their home equities, and secure some measure of financial security. Public policy is that every family deserves a decent and adequate to invest and live.
Social Change in the Housing Market
Monthly rent or mortgage payment is the largest expense item in many families. Housing is the first need to consider before one moves to live and work in any community. It is a personal decision to invest or just rent as a consumer in that community. Public policy is to leverage every American family investing in landed property for a decent home. Normally, every family should be interested to invest in the community. However, rental homes are commonly confused with homeownership due to inconsistent public policy administration in the housing market. Americans have become less concerned about their landed property rights as citizens. Many families are oblivious or have lost aspiration to invest in landed properties for decent homes to improve their living conditions in various communities. Thus, there is a need for social change in the housing market to get every family involved as investors in their various communities.
Families, irrespective of sizes of their incomes, could collaborate to invest in their local housing marketplaces. Such collaboration should be a voluntary network of existing and prospective homeowners to ensure effective management of equitable values of their landed properties for mutual benefits. The approach would complement public policy in local housing marketplaces. Although every family could be involved, it requires some knowledge of real estate management and the nonprofit sector to provide social change leadership. Since rent or monthly mortgage payment is the largest expense item in many families, they could collaborate to invest through a community-based nonprofit real estate management organization. The purpose is to help one another become homeowners, mutually protect their home equities, and secure some measure of financial security. Such a social entrepreneurial approach to investing could complement public policy in local housing marketplaces and resolve affordability issues.
Homeownership is the Great Equalizer
Homeownership is about landed property rights of citizens. Since private property right is about basic human right, the housing needs of citizens were considered part of the universal human rights declaration of 1948. The Housing Act of 1949 reasonably envisaged that every American family would soon have access to a decent home in a suitable living environment. Local housing marketplaces were rationally evolving with families communally helping one another to have decent homes. However, financial engineering of the housing industry and public policy administration led to tying household income sizes with housing needs of families. To ensure social justice, every family deserves some financial leverage for homeownership irrespective of household income size. Otherwise, homeownership confused with rental homes become the engine for driving income inequality instead of the great equalizer.
Homes are the most valuable assets of many American families. Low-income families should not be excluded from homeownership to avoid exploitative practices in local housing marketplaces. With such exclusion, the poorest families are inadvertently restricted to undesirable environments with inadequate housing. Their homeownership dreams become morbid desires. They become perpetually dependent on public subsidies for standard living conditions. Eliminating the structural anomaly in the economy requires community-based nonprofit real estate management because landed property value is inextricably intertwined with household income. Such nonprofit organization is therefore needed to provide a network for collaboration of low-income households to meet their housing needs with equitable leveraging. The essence of such nonprofit network is to ensure equal accessibility of local-housing-marketplaces to low-income households while preserving equitable values of their landed properties. The nonprofit investment approach is inevitable to rectify the confusion of homeownership with rental homes in local housing marketplaces because residential landed property values have been tied to household income sizes. In fact, the rental housing market is for leasehold arrangements among households to meet a broad spectrum of housing needs. The mutually beneficial public policy is the communal leveraging of one another in the housing market.
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HOUSING NEEDS IN A CAPITALIST ECONOMY
A housing unit is a capital asset in a fixed location. Therefore, housing every family is a social justice issue in a capitalist economy. Housing needs must also be met as essential capital assets to ensure social justice beyond the traditionally charitable assistance of helping one another to meet some essential needs for individual well-being. Although the public is not responsible to house every person, some public assistance or leverage is needed to meet individual housing needs in a decent home. Before financial engineering of the housing industry became more effective, families were used to helping one another to have homes. Leveraging one another through home mortgage loans has become the common practice in local housing marketplaces across the United States. Therefore, it must be public policy to ensure that every family has equitable access to local housing marketplaces to meet the essential needs. Conceptually, mortgage loans are invaluable communal strategies for the mutual benefits of leveraging one another to meet housing needs as capital resource assets. In practice, the housing finance system is helping families to improve their living conditions and build personal wealth. Although low-income households are inadvertently excluded from the communal strategy in public policy administration, every family deserves to be equitably leveraged to meet housing needs. The communal strategies are for mutual benefits. To ensure social justice, the mutual benefits should not be taken for granted. However, the mutual benefits are commonly misunderstood even in the academics as well as among policymakers.