October 10, 2002

Rent the Car, Buy the House(from BET.com) By Rep. Gregory W. Meeks

Maybe you've heard it said that owning a home is the sweet spot of the American Dream.
It's even better than that. Investing in a home of your own is one of the smartest moves
you can make with your money. Sure, the "sticker shock" might weaken your knees for a
minute. Homes do cost a lot of money. But you're getting plenty for your investment - not just a roof over your head, but the foundation of a strong financial future for you and your family.

In fact, just as an everyday kind of illustration, let's compare buying a house to buying a car. The minute you drive it off the showroom floor, the value of that brand new car goes down. But when you buy a home, you're actually building wealth as the value of the house appreciates over the years.

When you buy a car and the warranty runs out, the money you put into repairs is just an expense. The car might run better, but it's not worth more. But the money you invest in repairing and improving a house increases its value.

What about taxes? There aren't any personal tax advantages to owning a car. But if you itemize as a homeowner, you can deduct both property taxes on your house and the interest you pay on the mortgage.

The fact is, when you buy a house and keep it in good shape, what you're really doing is accumulating wealth. You're creating a personal asset, one that you can cash out for things like educating your children, or for retirement or other needs as your life situation changes. You can build equity in a house you can borrow against like paying off high interest debt or starting a business.

Try doing any of those things with your car. What it comes down to is that with the passing of time, your home becomes an increasingly valuable resource. A new car just becomes a used car.
And while a car can get you from one town to the next, a house can get you ahead in life, help you put down roots in a community.

You get the idea. A house is an excellent investment. Back in the 1990s, when the stock market was king, the real royalty was homeownership. Even during those glory years for the market, homeowners actually built more wealth in their homes than they did in stocks.

I'll give you another illustration. Fannie Mae is the nation's biggest supplier of mortgage funds to lenders around the country. They point out that in 2001, when industrial production and car sales and clothing production and machine tool orders all went down ... home construction grew by four percent. And home sales were up nearly 6 percent.

In 2001, consumers spent an amazing $1.7 trillion on housing related goods and services, making it the number one consumer product in the United States.

Homeownership is a main aim of millions of Americans, and it has been throughout our history. More than 70 years ago, for example, the President held a White House conference on Home Building and Home Ownership. Times were really tough back then. Even so, the President was all for homeownership, reminding his audience that, "they never sing songs about a pile of rent receipts."

He got that right. I know. I grew up in public housing. I've seen how owning a home can change lives. I've seen people build personal wealth, open up a better future for their
families, and build neighborhood and community stability because they became homeowners. And I've also seen the national homeownership rate climb over 67 percent. But I've seen the rate for African Americans down around 48 percent which translates into fewer wealth-building opportunities.

The fact is, it's a good idea to own a house, and this is a good time to buy one.

The Congressional Black Caucus (CBC) of which I am a member, and the CBC Foundation have launched the "WOW" Initiative. It means, "With Ownership, Wealth." The initiative is a coalition of financial institutions, mortgage insurance companies, trade associations, Realtors and grassroots community organizations. They are working together to increase homeownership among people of color.

Our goal is one million new African American homeowners by 2005. There are real possibilities out there for homeownership. You might want to check out the "Owning a Home" channel on
BET.com. It's got homeownership information, a way to calculate the costs involved, and connections to lenders. You can even apply for a loan on-line through lender call centers set up especially for BET.com visitors.

Whatever you do ... don't let your chance pass you by. Talk to a lender. Get information. There are mortgages available aimed at people who might have trouble with the down payment, or whose credit might be blemished. You never know how close you might be to homeownership if you don't ask the questions.

And keep checking Building Black Wealth on BET.com to learn more about what WOW events are going on in your community.