Las Cruces Sun-News article rankles real estate community

Census shows owning home can be expensive, By Steve Ramirez sramirez@lcsun-news.com


Posted: 04/17/2011 11:57:03 PM MDT


LAS CRUCES - All Sally Balderama could do is sigh and acknowledge it as a necessary evil.

"Where does it all go," muttered Balderama, referring to the bi-weekly paychecks she and her husband, Rudy, bring home.

She said the rising prices have taken a bigger bite out of her family's checkbook than she initially realized.

"The nickel-and-diming really does suck out a lot," Balderama said. "But, man, the cost of essentials, like food, clothing, and the mortgage all seem to take out a lot more than ever before."

Balderama agreed the value of her dollar has noticeably shrunk. But she is part of a big club in Las Cruces: the one that includes 65.9 percent of residents who own a home and have a mortgage payment to go with it.

The average monthly housing cost for city homeowners was $1,108 from 2005 to 2009, based on 2010 U.S. Census data. For homeowners who didn't have a mortgage it was $308, and it was $662 for renters.

Las Cruces' housing costs are comparable to New Mexico's averages. Statewide, the median monthly housing costs for mortgaged owners was $1,158 - $50 more than the city's average, $295 for non-mortgaged owners, and $659 for renters.

Las Crucen Kyle Finch, an engineer, agreed the part of the American dream of owning your own home could be an expensive proposition. The latest Census Bureau data shows 33 percent of city homeowners with mortgages, 11 percent of those without mortgages, and 55 percent of renters spent 30 percent or more of their monthly household income on housing.

In Dona Ana County monthly housing costs are a little cheaper. For people with a mortgage it's $59 less, $13 lower for a homeowner without a mortgage, and $51 for renters.

"If I could've known then what I know now, I wouldn't have built a custom home," said Finch, who's mortgage payment is almost $1,700 a month. "I got what I wanted, but, boy, it's ended up being more of a drain on my family's wallet than I definitely would've hoped for. We've only had the house now for a little more than four years, and I'm not in a position yet where I can think about refinancing it. We'll just have to keep working harder, scrimping a little more, to work it all out."

But it could have been worse. The average monthly housing cost for Americans with a mortgage is $1,486, and $419 for those without a mortgage, $817 for renters. More than one-third of Americans with a mortgage, 50 percent of renters, and 16 percent of homeowners who have paid off their mortgage spent 30 percent or more of their income on housing from 2005 to 2009.

Steve Ramirez can be reached at sramirez@lcsun-news.com; (575) 541-5452.

This article created some ill-will towards the LC Sun-News among the real estate community. I spoke with the reporter about his content. He said the headline to the story was written by someone else and it was not his intent to suggest that renting a home is preferable to owning it. He was emphatic that it was more cost effective to purchase a home than to rent it.

My response to the newspaper is as follows, though it will be edited for size when it appears in the Op-Ed section of the newspaper soon.

On behalf of homeowners throughout our community and the nation, I feel a response is warranted to the front page article, “Census shows owning home can be expensive,” April 18, 2011. I have spoken with the reporter, Steve Ramirez, who had no part in writing the headline. He told me his article did not suggest owning a home could be more expensive than renting. Maybe not, but his article did say “part of the American dream of owning your own home could be an expensive proposition.” We rely upon journalists to present the facts so the readers understand all the issues of a topic. It’s time to review real facts about home ownership.

When you own a home, you either own it outright or you make regular payments on it that build equity. The alternative to home ownership is to pay rent, or be homeless. Renting is a great option for people who don’t want a long term commitment, but there is no return on the investment. Owning a home contributes to financial wealth, renting a home deducts from it. In my conversation with Mr. Ramirez, he agreed that renting a home is much more expensive than owning it.

However, the topic of real costs/benefits of home ownership vs renting is much greater than dollars spent. There have been many scientific studies done over several decades on these themes. Here is what we know for sure: People who own their home have greater educational achievements and earn more income, and they encourage their children to do the same. They tend to manage their money better. They are more involved in civic matters and more likely to vote. They volunteer more often and contribute more to charity. They have more control of their lives, and better physical and mental well-being. They maintain their homes and look after their neighbors. There is less crime in neighborhoods having owner occupied homes and less need for public assistance. The children of homeowners are less likely to drop out of school, have teenage pregnancies, or get involved in criminal behavior. The overall benefits of home ownership to the community and the nation compound as you go from one socio-economic indicator to another. On a personal level, home ownership is a decision that financial planners favor. But at the local or national level, it is a good indicator of a stable society. Regardless of the economy, the merits of home ownership remain as steadfast as ever.

Article from Las Cruces Bulletin Neighbor to Neighbor 4/15/11

One of my duties as President of the Las Cruces Association of REALTORS is to write articles for the Neighbor to Neighbor published by the Las Cruces Bulletin.  It is reprinted here with permission.

Is homeownership relevant?Real estate has had much negative publicity since the downturn in the real estate market caused some hom­eowners to feel their home might be more of a risk than an asset. I felt this topic should be addressed directly in my first article as president of Las Cru­ces Association of Realtors.

The real estate sector in this country has taken a beating the past few years, and many peo­ple are wondering if homeown­ership is right for them. We’ve had chronic negative publicity about the meltdown of the real estate economy. All of us were harmed by speculative buying and risky mortgage products, however, most people are paying their mortgages on time, every time and they love their homes.

Yes, real estate market values have decreased in this correction cycle, but they will improve over time. A home is not a cash cow, but as part of a financial portfolio, it is more stable than a wildly fluctuating stock market.

There is a larger picture of homeownership. It is incred­ibly important to the struc­ture and quality of life of any community. People who own and live in their homes have a strong interest in taking care of their investment.
They care about what is going on in their neigh­borhood and the direction government leaders are tak­ing. They’re more motivated to communicate with their elected officials.  Homeowners are more likely to participate in civic leadership. Renters, by the nature of their tenancy, gener­ally do not share in this level of stewardship.

The difference between a neighborhood of owner-occu­pied homes and a neighbor­hood of tenant-occupied in­vestment properties is a very compelling argument for pro­moting home ownership in every possible way. There are good landlords and property managers who do an excel­lent job of maintaining their investment portfolio, but a bad landlord or low-quality tenant can be like a virus, spreading disease and decay to the property or neighbor­hood and beyond.

Homeownership is as rele­vant today as it ever was. Hom­eowners have more control and personal satisfaction in their lives, and more commitment to their communities. It is in everyone’s best interest to get the real estate market back on track. With the interest rates still at his­toric lows and the low market pricing, the buyer with a real­istic down payment and view toward the long-term com­mitment is in a good position for one of the best times ever to participate in the American Dream of homeownership.