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Taking another look at The Owner-Renter Divide: America's Caste System

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I originally wrote this post when we didn't have the readership we have now. Thinking the points here are worth a repeat. I do so now, updating:

According to the American Housing Survey, some 7.5 million U.S. households fork over more than half of their income for rent or mortgage payments. In more cases than not, this bind means a monthly scramble to pay- and then cover-the rent check.

Such scrambles are not restricted to those 7.5 million households. Drawing from my own life experiences, I can recall moments in time when I obtained high-interest cash advances or rode the check float to ensure that my rent check would not bounce. In one case, I had to go to a check-cashing place and take a 3 percent hit redeeming an out-of-town check to catch my rent payment.

Due to the nature of my work, I've been able to escape from such straits, but so many other families can't. As Paul Krugman wrote in the New York Times earlier this year, the inflation-adjusted median income of the American family rose only 22 percent between 1973 to 2003- and much of that gain resulted from both spouses compelled to enter the workforce.

And what happens if you, or your spouse - or both, are unable to work? You probably will not be able to afford health insurance or medicine. In most localities, eviction for non-payment of rent is little more than a matter of a finger-snap on the part of your landlord. Bankruptcy as relief?

On October 17, it will get much, much tougher. If you are unlucky, you are branded as a risk - a stigma that may take you years, or a winning lottery ticket, to overcome.

Tens of millions of Americans are already there, but not the growing number of citizens who are rising the housing boom. As the economic noose tightens and the safety net shreds, we see the lucky, the fortunate, the financial intelligensia go absolutely hogwild.

In May, TIME magazine did an effective job describing the insanity of greenback-dripping speculators begging widows to sell out so they could build a Macmansion on the site. Million-dollar homes are being knocked down in favor of multi-million dollar homes.

And in the heart of some of our revitalizing downtown cores,yuppies and empty-nesters rendered financially corpulent by stock options and carefully parsed 401(k)s are not only driving condo prices through the roof -but are causing apartment complex owners to succumb to condo-conversion opportunities. Happened to me here in the Portland, Oregon area. My high-end apartment went higher-end condo. I considered a purchase, but shortly after this year began, I looked at the endless procession of luxury autos parked outside the real estate office and decided I didn't want to get caught up in the mad rush.

Are you sensing what I am getting at here? There are two Americas: one for property renters and one for property owners. Renters live in a world of arbitrary rules, where ruin is an illness or pink slip away. Owners can be foreclosed on, of course, but we live in a society where purchasers can procure mortgages loans for a couple of pennies on the dollar. The more financially vulnerable renters live in a world of 25% cash advances and 125% payday loans.

I don't know if the playing field can be equalled, but a good way to start might be to recognize what is driving this real-estate boom: the home mortgage deduction. If you are a renter, deductions on your rent may only be available to you if you have a home office. Yet if you have a mortgage, well, you are in great shape to feast at the till.

It would be too fiscally injurious to eliminate the home mortgage deduction, but also naive to fail to realize what the home mortgage deduction is: a privileged status afforded to property owners - who are far more likely to vote than are renters.

How do we equal this owner-renter chasm? Restrict the home mortgage deduction, and use the extra tax revenue to build more affordable housing. Put price caps on big pharma. Enact eviction laws with time lines that are similar to foreclosure statutes.

Roll back the tightened bankruptcy laws. Unfortunately, in the last election, too many challenged-income folks who would benefit by such bold moves voted for a party more concerned with banning gay marriage than with making their lives better.

"Moral values," remember?