17 ms·

> How do you design a home that someone living below the poverty line can afford Why not rent a flat instead? Wouldn't that be much more economical (no propert

> How do you design a home that someone living below the poverty line can afford Why not rent a flat instead? Wouldn't that be much more economical (no property prices, lower heating costs, less maintenance work, less risk, not built on the cheap)? I don't understand the fixation on owning a house / living in a single-family house many americans seem to have.

techsupporter 11y ago
One facet of it is cultural: For a lot of people, someone isn't seen as a "real adult" until he or she owns a residence. (Obligatory "if you have a mortgage you're just renting from the bank and have to fix the water heater yourself" line here.) Another is financial: There are heavy tax incentives towards ownership, though this is lessened in the era of cheap money. (On the other hand, if a mortgage can be had for cheap, that puts upward pressure on house prices because fewer units of currency go towards borrowing costs.) Still another is logistical: Most areas of the U.S. have very few renter protections. If your landlord wants you out and you're not under a current lease, you're out (property rights of the owner and all). This goes double for the desirable places to live. For those who can manage it, the stability of "my housing cost is a known quantity that varies only a little bit outside of my control" (obligatory "did you save for a new hot water heater?" goes here) outweighs the relative immobility of property ownership. Plus, a somewhat high price is put on the ability to paint one's own walls, have a pet, and do minor renovations without asking for permission. Witness the plethora of "home remodeling" shows and TV channels. In many rental units, doing this is not just frowned upon, it is actively forbidden by the lease. As always, to stave off the inevitable replies of "but my rental experience has never been like that," your miles may vary. I lived in one apartment in Texas that let me do everything short of bulldozing my unit. I lived in another in Seattle that charged me $300 because I got a drop of orange drink on the carpet in a bedroom.
- creshal 11y ago
  So, the US favours owning residences because renters have nigh zero legal protection?
  - alistairSH 11y ago
    Partly, yes. We also get to deduct interest paid on mortgages from our federal income taxes. This deduction can be used for primary and secondary homes. The tax deduction alone is a massive incentive to buy a home. Particularly given the housing options available in most cities... we have massive tracts of suburban development where a mortgage typically costs a similar amount monthly as renting a large apartment downtown.
    - logfromblammo 11y ago
      On the other hand, the savings from the income tax deduction is easily nullified by local property tax, maintenance costs, and the differential between homeowners' and renters' insurance.
  - aidenn0 11y ago
    There are significant regional differences too. As other threads have pointed out, this house is designed for parts of the country where the land has very near zero value, and may have been in the family for over 200 years. Contrariwise, I live in coastal California. When I first moved here, I paid USD 1000 per month to rent a large 1 bedroom apartment within walking distance of downtown (and only 400m walk from work!). To buy an apartment of similar size at the time was roughly USD 350 000 and it would be further from downtown. Also, California has stronger renter protection laws, and the city I live in has a few more. For various reasons poor people may not wish to exercise those rights (arrest warrant, status as illegal immigrant, unpaid fines), so there are still a lot of shady dealings with renting, but a large fraction of those are already priced out of owning a home, even living with 3+ people per bedroom.
- timje1 11y ago
  I think this is also why home ownership is prized so highly in Britain - at least since the rental market was deregulated.
  - mseebach 11y ago
    It goes back much longer. Thatcher's Right to Buy policy successfully tapped into this desire in 1980, and the rental market wasn't deregulated until 1988. Specifically, the properties covered by Right to Buy were strongly eviction-protected.
  - koralatov 11y ago
    Part of it, here in Aberdeen at least, is that rental prices are extortionate, and if you can scrape together the money to buy, it's often much cheaper; I'm paying a little over half the rental cost of my flat in mortgage payments each month. Most other home-owners I know are in the same boat and save a lot by owning rather than renting. I realise there are added costs to owning, and it's not quite apples-to-apples, but I'm pretty sure we all still come out ahead at the end of the equation. I realise I'm very fortunate to have been in the position to buy a place five years ago, and I'm grateful for the combination of fortuitous timing and hard-work paying off. That said, if I could have continued to rent affordably, I would probably still be renting today.
  - deleted 11y ago
    [deleted]
- zo1 11y ago
  >"Still another is logistical: Most areas of the U.S. have very few renter protections. If your landlord wants you out and you're not under a current lease, you're out" This sort of thing happens when you don't have a contract that enumerates what happens if either party wants out.
  - Kliment 11y ago
    You can't get a contract like that - the terms are entirely dictated by the landlord in the absence of regulation because of the scarcity of housing.
PhasmaFelis 11y ago
Judging from the name, I'd guess they're targeting rural areas. Rural land is dirt cheap, and it's not uncommon for even very poor families to have a decent plot that's been in the family for generations; but if there's a house on it at all, it's decrepit and crumbling. This is the same group that Habitat for Humanity serves, for example. My mother helped build a Habitat house in Belize a while back; the land was a tiny scrap of muddy landfill in the middle of a slum, but the family owned it free and clear. (These areas don't generally have apartments available at all. The economics don't support it.)
SwellJoe 11y ago
America is big. Things are spread out in most cities and towns. When living in the city, one gets value in exchange for giving up the privacy of owning your own home and land. And, it is not realistic for people who are poor, or even middle class, to own a home in a major metropolis, and so they often do live in an apartment or townhome (a mini-house that shares walls with one or more other townhomes...somewhere between a condominium and a real house). I would accept that kind of lifestyle if living in a densely populated city. I wouldn't if living in most mid-sized cities in the US...but, housing is still expensive. A tiny house on a plot of land fits the bill perfectly for me. I don't need more living space than an apartment provides, I just need more space than having neighbors on the other side of the wall provides. I also want a garden. Americans who grew up in rural areas have an even more extreme view of how much space is the right amount than I do (I grew up in the suburbs, and still hate apartments). Also, I want to own where I live, by the time I get close to retirement age (which I'm still a few decades away from, but it's part of the usual retirement plans for most Americans, and they start working on it during middle age).
- Loughla 11y ago
  >Americans who grew up in rural areas have an even more extreme view of how much space is the right amount than I do (I grew up in the suburbs, and still hate apartments). Yep. To add to this. The right amount of space for me (raised rural) is so much that I can see neither see nor hear the neighbors unless I choose to. So, about 1/4 mile between us at a minimum. (Am currently working on purchasing property across the road from our home to avoid ever having neighbors.) I think people forget just how incredibly massive this country is.
  - eblanshey 11y ago
    Somewhere in the midwest?
DiabloD3 11y ago
Rent does not build wealth. Rent is the act of transferring wealth from the poor to the rich. Rent is, essentially, theft from society itself, it leaves everyone poorer when most people rent. Rent in America today is identical to the serfs of old. The post-WW2 thing the Government did with getting everyone mortgages so they would be home owners that caused the eventual economic collapse 10 years ago? They had the right idea, but the wrong execution. Instead of making everyone homeowners, make everyone fiscally responsible so that getting a mortgage wouldn't be hard for them in the first place. I don't entirely blame them though: building Freddy and Fannie was magnitudes easier than fixing the broken parts of American society and (lack of) education. This is one of the large reasons why I'm supporting Bernie, he actually has spoken in depth about how to fix the underlying bullshit that keeps so many Americans renters instead of being homeowners and building their personal wealth. It has been proven in at least one study that financial stress causes a measurable drop in IQ: literally, being poor makes you stupid. We need less stupid people, to put it frankly. Edit: Don't downvote. Reply with your counter-viewpoint. HN isn't Reddit. Edit 2: Bernie said it better than me: http://imgur.com/gallery/DaHIv http://imgur.com/gallery/DaHIv
- tempestn 11y ago
  I actually think you are right that the real challenge is spreading fiscal responsibility. However, it doesn't follow that everyone should own a home, or that rent is somehow evil. If you rent, you pay rent. If you own, you pay interest on a loan[1] and maintenance costs. There is also a forced savings component in the form of mortgage principle payments. There are also less tangible benefits to both renting and owning. Renting is entirely flexible and allows you to relocate with ease. Owning gives more flexibility in customizing your home. Different people will ascribe different values to these benefits. Especially for someone who does not yet know where they want to settle long term, renting might be very attractive. Because of the forced savings aspect of owning, renting will almost always be cheaper on a cash-flow basis. Therefore, if a person earns a middle class income[2] and is fiscally responsible, it provides an opportunity to put money into a diversified, low-cost investment portfolio. Eventually, that portfolio should grow to the point where purchasing a modest home is possible. What's more, it will hopefully start a habit that will continue through life, and eventually provide for a comfortable retirement. So again, I absolutely agree with you that finding a way to better teach smart personal finance is critical. I just don't see at all how it follows that everyone must own a home (immediately). [1] Or if you own outright, you pay the opportunity cost on funds that could be invested elsewhere. [2] Obviously at a certain level of poverty, there simply is no additional money to put away, even after any discretionary spending is cut. That isn't an issue of affordability of homes though; it's an issue of poverty, which needs to be tackled directly.
vacri 11y ago
As an Australian who has rented all his life, you live knowing that the rug can be pulled from under you at any point. I think in my state that the notification period to 'get out!' is 90 days, but it may be shorter. Owning your own home also means you can do what you like with it, have what pets you like, so on and so forth. The equation is more than comparing dollars out.
jensen123 11y ago
> Why not rent a flat instead? Flats usually suck because you have noise from neighbors. Of course, you can build flats with better sound insulation, but that obviously costs more, although I'm not sure how much more.
okc 11y ago
When a section of society is forced to rent off a richer section of society, then you have a self perpetuating financial inequality - a poverty trap. For people in poverty, house ownership isn't a financial option. Giving poorer people the option to own or rent, gives people empowerment over their future.
drone 11y ago
A lot of the poor, rural, families these low-cost homes are targeted at are living on land owned by the family for generations. They often do small-scale farming or large-scale gardening (depending on your definition) and hunting/gathering on the property for food. In many cases, there will be multiple generations of the family living in separate houses on the same property. At least, these things were all true when I lived in family property in West Virginia in the 80's. We had four houses on about 200 acres in a valley, nearly an acre of garden, and other relatives would regularly stop by from nearby valleys on hunting trips, sharing what they managed to catch for what we managed to grow.
jandrese 11y ago
My experience is that owning is cheaper than renting in the long run. It makes sense in the broad context because when you rent you still have to cover all of the costs, but they just get hidden in your monthly rent, and additionally you need to pay the landlord--an expense you don't have with ownership. There is a modest benefit in spreading out the risk as well, if you have a major maintenance expense you won't be responsible for the cost up front, however homeowners can purchase insurance that does the same thing (but are usually a pretty bad deal IMHO). There are some efficiencies to renting. The maintenance can be done by dedicated staff at negotiated rates instead of having to hire outside work. But the efficiencies don't really appear until you're living in a massive complex with lots of other customers to spread the cost around. When I bought my first house my $1700/month rent for a 800 square foot apartment became a $1000/month mortgage for a 1400 square foot townhouse in a better part of town. And unlike renting I would eventually run out of mortgage after 30 years and have a big asset in my name, one that is likely to appreciate in value over the long term. In the long term renting is a pretty bad deal for everybody but the landlord.

techsupporter 11y ago

One facet of it is cultural: For a lot of people, someone isn't seen as a "real adult" until he or she owns a residence. (Obligatory "if you have a mortgage you're just renting from the bank and have to fix the water heater yourself" line here.) Another is financial: There are heavy tax incentives towards ownership, though this is lessened in the era of cheap money. (On the other hand, if a mortgage can be had for cheap, that puts upward pressure on house prices because fewer units of currency go towards borrowing costs.) Still another is logistical: Most areas of the U.S. have very few renter protections. If your landlord wants you out and you're not under a current lease, you're out (property rights of the owner and all). This goes double for the desirable places to live. For those who can manage it, the stability of "my housing cost is a known quantity that varies only a little bit outside of my control" (obligatory "did you save for a new hot water heater?" goes here) outweighs the relative immobility of property ownership. Plus, a somewhat high price is put on the ability to paint one's own walls, have a pet, and do minor renovations without asking for permission. Witness the plethora of "home remodeling" shows and TV channels. In many rental units, doing this is not just frowned upon, it is actively forbidden by the lease. As always, to stave off the inevitable replies of "but my rental experience has never been like that," your miles may vary. I lived in one apartment in Texas that let me do everything short of bulldozing my unit. I lived in another in Seattle that charged me $300 because I got a drop of orange drink on the carpet in a bedroom.

creshal 11y ago
So, the US favours owning residences because renters have nigh zero legal protection?
- alistairSH 11y ago
  Partly, yes. We also get to deduct interest paid on mortgages from our federal income taxes. This deduction can be used for primary and secondary homes. The tax deduction alone is a massive incentive to buy a home. Particularly given the housing options available in most cities... we have massive tracts of suburban development where a mortgage typically costs a similar amount monthly as renting a large apartment downtown.
  - logfromblammo 11y ago
    On the other hand, the savings from the income tax deduction is easily nullified by local property tax, maintenance costs, and the differential between homeowners' and renters' insurance.
- aidenn0 11y ago
  There are significant regional differences too. As other threads have pointed out, this house is designed for parts of the country where the land has very near zero value, and may have been in the family for over 200 years. Contrariwise, I live in coastal California. When I first moved here, I paid USD 1000 per month to rent a large 1 bedroom apartment within walking distance of downtown (and only 400m walk from work!). To buy an apartment of similar size at the time was roughly USD 350 000 and it would be further from downtown. Also, California has stronger renter protection laws, and the city I live in has a few more. For various reasons poor people may not wish to exercise those rights (arrest warrant, status as illegal immigrant, unpaid fines), so there are still a lot of shady dealings with renting, but a large fraction of those are already priced out of owning a home, even living with 3+ people per bedroom.
timje1 11y ago
I think this is also why home ownership is prized so highly in Britain - at least since the rental market was deregulated.
- mseebach 11y ago
  It goes back much longer. Thatcher's Right to Buy policy successfully tapped into this desire in 1980, and the rental market wasn't deregulated until 1988. Specifically, the properties covered by Right to Buy were strongly eviction-protected.
- koralatov 11y ago
  Part of it, here in Aberdeen at least, is that rental prices are extortionate, and if you can scrape together the money to buy, it's often much cheaper; I'm paying a little over half the rental cost of my flat in mortgage payments each month. Most other home-owners I know are in the same boat and save a lot by owning rather than renting. I realise there are added costs to owning, and it's not quite apples-to-apples, but I'm pretty sure we all still come out ahead at the end of the equation. I realise I'm very fortunate to have been in the position to buy a place five years ago, and I'm grateful for the combination of fortuitous timing and hard-work paying off. That said, if I could have continued to rent affordably, I would probably still be renting today.
- deleted 11y ago
  [deleted]
zo1 11y ago
>"Still another is logistical: Most areas of the U.S. have very few renter protections. If your landlord wants you out and you're not under a current lease, you're out" This sort of thing happens when you don't have a contract that enumerates what happens if either party wants out.
- Kliment 11y ago
  You can't get a contract like that - the terms are entirely dictated by the landlord in the absence of regulation because of the scarcity of housing.

PhasmaFelis 11y ago

Judging from the name, I'd guess they're targeting rural areas. Rural land is dirt cheap, and it's not uncommon for even very poor families to have a decent plot that's been in the family for generations; but if there's a house on it at all, it's decrepit and crumbling. This is the same group that Habitat for Humanity serves, for example. My mother helped build a Habitat house in Belize a while back; the land was a tiny scrap of muddy landfill in the middle of a slum, but the family owned it free and clear. (These areas don't generally have apartments available at all. The economics don't support it.)

SwellJoe 11y ago

America is big. Things are spread out in most cities and towns. When living in the city, one gets value in exchange for giving up the privacy of owning your own home and land. And, it is not realistic for people who are poor, or even middle class, to own a home in a major metropolis, and so they often do live in an apartment or townhome (a mini-house that shares walls with one or more other townhomes...somewhere between a condominium and a real house). I would accept that kind of lifestyle if living in a densely populated city. I wouldn't if living in most mid-sized cities in the US...but, housing is still expensive. A tiny house on a plot of land fits the bill perfectly for me. I don't need more living space than an apartment provides, I just need more space than having neighbors on the other side of the wall provides. I also want a garden. Americans who grew up in rural areas have an even more extreme view of how much space is the right amount than I do (I grew up in the suburbs, and still hate apartments). Also, I want to own where I live, by the time I get close to retirement age (which I'm still a few decades away from, but it's part of the usual retirement plans for most Americans, and they start working on it during middle age).

Loughla 11y ago
>Americans who grew up in rural areas have an even more extreme view of how much space is the right amount than I do (I grew up in the suburbs, and still hate apartments). Yep. To add to this. The right amount of space for me (raised rural) is so much that I can see neither see nor hear the neighbors unless I choose to. So, about 1/4 mile between us at a minimum. (Am currently working on purchasing property across the road from our home to avoid ever having neighbors.) I think people forget just how incredibly massive this country is.
- eblanshey 11y ago
  Somewhere in the midwest?

DiabloD3 11y ago

Rent does not build wealth. Rent is the act of transferring wealth from the poor to the rich. Rent is, essentially, theft from society itself, it leaves everyone poorer when most people rent. Rent in America today is identical to the serfs of old. The post-WW2 thing the Government did with getting everyone mortgages so they would be home owners that caused the eventual economic collapse 10 years ago? They had the right idea, but the wrong execution. Instead of making everyone homeowners, make everyone fiscally responsible so that getting a mortgage wouldn't be hard for them in the first place. I don't entirely blame them though: building Freddy and Fannie was magnitudes easier than fixing the broken parts of American society and (lack of) education. This is one of the large reasons why I'm supporting Bernie, he actually has spoken in depth about how to fix the underlying bullshit that keeps so many Americans renters instead of being homeowners and building their personal wealth. It has been proven in at least one study that financial stress causes a measurable drop in IQ: literally, being poor makes you stupid. We need less stupid people, to put it frankly. Edit: Don't downvote. Reply with your counter-viewpoint. HN isn't Reddit. Edit 2: Bernie said it better than me: http://imgur.com/gallery/DaHIv http://imgur.com/gallery/DaHIv

tempestn 11y ago
I actually think you are right that the real challenge is spreading fiscal responsibility. However, it doesn't follow that everyone should own a home, or that rent is somehow evil. If you rent, you pay rent. If you own, you pay interest on a loan[1] and maintenance costs. There is also a forced savings component in the form of mortgage principle payments. There are also less tangible benefits to both renting and owning. Renting is entirely flexible and allows you to relocate with ease. Owning gives more flexibility in customizing your home. Different people will ascribe different values to these benefits. Especially for someone who does not yet know where they want to settle long term, renting might be very attractive. Because of the forced savings aspect of owning, renting will almost always be cheaper on a cash-flow basis. Therefore, if a person earns a middle class income[2] and is fiscally responsible, it provides an opportunity to put money into a diversified, low-cost investment portfolio. Eventually, that portfolio should grow to the point where purchasing a modest home is possible. What's more, it will hopefully start a habit that will continue through life, and eventually provide for a comfortable retirement. So again, I absolutely agree with you that finding a way to better teach smart personal finance is critical. I just don't see at all how it follows that everyone must own a home (immediately). [1] Or if you own outright, you pay the opportunity cost on funds that could be invested elsewhere. [2] Obviously at a certain level of poverty, there simply is no additional money to put away, even after any discretionary spending is cut. That isn't an issue of affordability of homes though; it's an issue of poverty, which needs to be tackled directly.

vacri 11y ago

As an Australian who has rented all his life, you live knowing that the rug can be pulled from under you at any point. I think in my state that the notification period to 'get out!' is 90 days, but it may be shorter. Owning your own home also means you can do what you like with it, have what pets you like, so on and so forth. The equation is more than comparing dollars out.

jensen123 11y ago

> Why not rent a flat instead? Flats usually suck because you have noise from neighbors. Of course, you can build flats with better sound insulation, but that obviously costs more, although I'm not sure how much more.

okc 11y ago

When a section of society is forced to rent off a richer section of society, then you have a self perpetuating financial inequality - a poverty trap. For people in poverty, house ownership isn't a financial option. Giving poorer people the option to own or rent, gives people empowerment over their future.

drone 11y ago

A lot of the poor, rural, families these low-cost homes are targeted at are living on land owned by the family for generations. They often do small-scale farming or large-scale gardening (depending on your definition) and hunting/gathering on the property for food. In many cases, there will be multiple generations of the family living in separate houses on the same property. At least, these things were all true when I lived in family property in West Virginia in the 80's. We had four houses on about 200 acres in a valley, nearly an acre of garden, and other relatives would regularly stop by from nearby valleys on hunting trips, sharing what they managed to catch for what we managed to grow.

jandrese 11y ago

My experience is that owning is cheaper than renting in the long run. It makes sense in the broad context because when you rent you still have to cover all of the costs, but they just get hidden in your monthly rent, and additionally you need to pay the landlord--an expense you don't have with ownership. There is a modest benefit in spreading out the risk as well, if you have a major maintenance expense you won't be responsible for the cost up front, however homeowners can purchase insurance that does the same thing (but are usually a pretty bad deal IMHO). There are some efficiencies to renting. The maintenance can be done by dedicated staff at negotiated rates instead of having to hire outside work. But the efficiencies don't really appear until you're living in a massive complex with lots of other customers to spread the cost around. When I bought my first house my $1700/month rent for a 800 square foot apartment became a $1000/month mortgage for a 1400 square foot townhouse in a better part of town. And unlike renting I would eventually run out of mortgage after 30 years and have a big asset in my name, one that is likely to appreciate in value over the long term. In the long term renting is a pretty bad deal for everybody but the landlord.