From a house’s point of view, it must seem odd to have to be paid off again and again as if it were being rebuilt anew every few years. A house could be built and then paid off, then enjoyed by those that get to live in her and take care of her– maybe passed down, maybe sold to new owners. But this is not how it works.
A house is built, slapped with a 30 year mortgage (at least these days), and the owners generally move out before the 30 years (seems on average after 6 years, so they do not even get beyond paying interest). The new owner then gets to start again– take on a new 30 year mortgage to pay it off. But again, they don’t get to pay much beyond the interest, and the house is not paid off as it is passed to the new owner.
But even after 30 years of this, the house should be paid off, but it isn’t– because the mortage keeps getting renewed. Even houses that are 100 years old, they are not paid off. From the bank’s point of view, the full principle now has to be paid yet again. Kind of a Ground Hog Day, but a nasty one.
I do understand the counter argument– the owner gets to try to get as much as they can from the next owner, and this is what the market will bear.
But maybe, we have orchestrated “the market” in a perverse way. “The market” is just made up. It is a human artifice. It is buttressed with government subsidies (like the home mortgage deduction and Fannie Mae) to make it what it is. Thirty year mortgages are just made up, so we can make up something else.
I propose we create incentives to pay off a building once and keep it paid off. If we did this, then used houses would cost much less than they do now. The original owners get to live in a new house and slowly pay it off.
At least we can start this without a radical reshifting of our tax and banking system by creating debt free housing. I believe we experiment in the small, but create a model that could catch on. It would really be embraced when we get tax and law structures to reinforce the idea of Debt-Free Housing, but at least we can get started now.