Tom Graneau is the author of Renters Win, Home Owners Lose: Revealing the Biggest Scam in America. Lately, he spent roughly ten years as a financial management coach, conducting workshops and private consultations for people in the military, government agencies, and the civilian community. His first book, Are You Financially Checkmate?, was published in 2005 and is now being revised.
Q: Thank you for this interview, Tom. Can you tell us what your latest book, Renters Win, Home Owners Lose: Revealing the Biggest Scam in America, is all about?
The real estate industry, including banks, mortgage companies, the government, and various other organizations have come together with one voice, claiming that home ownership is the most reliable path for financial prosperity. Presently, most Americans (70 percent, down from 83 percent in 2003) are preoccupied over the idea of owning a home as a financial investment. However, based on historical trends and statistical facts, Renters Win, Home Owners Lose: Revealing the Biggest Scam in America debunks the wealth claim linked to home ownership.
On the contrary, when the opportunity for wealth building is compared between home buyers and renters, those who rent have greater propensity for financial success. Data indicates that those who have purchased homes (in some cases, more than once) are not necessarily better off financially than those who haven’t. For instance, more than 85 percent of the 78 million baby boomers in the United States are home owners. Many of them have bought and sold several homes. Yet, close to 90 percent of them are broke. The curious question is, where is the wealth earned from the home.
Additionally, more than 2/3 (78 percent) of American families are home owners. Nonetheless, the majority of them are strapped for cash, have little or no retirement savings, and are deep in debt. Renters Win, Home Owners Lose is a stunning, thought-provoking work that unravels the realities of home ownership. All told, renting is a wiser choice than buying.
Q: How did you come up with the idea?
The inspiration for Renters Win, Home Owners Lose essentially started in 1996. While sitting in an economic class for a Bachelor of Science Degree, it occurred to me that most people in the United States are broke. By that time, many of my fellow students had admitted, in one way or another, that they were borrowing money for college—thousands of dollars in student loans that would take years to pay back. Furthermore, during my course of business, I noticed that more and more people used credit cards for purchases instead of cash.
Interestingly, I was in the same financial predicament. I was using credit cards to pay for things, not because it was convenient to do so, I simply did not have the cash available. At the time, I had recently separated from the military and had difficulty finding a job without a degree that paid more than the minimum wage. My six-dollar an hour job was barely enough to pay for essentials. To make matters worse, I was receiving foreclosure threats from my lender who was demanding money to bring the mortgage current. Meanwhile, my credit card balances were skyrocketing.
My desire to improve my situation led to research, which confirmed my suspicion about the financial condition of the masses. I discovered that the majority of Americans live from paycheck to paycheck regardless of income, education, or career position. The root problems are many, but nothing consumes more of our hard-earned income than the homes we buy. Hence the book, Renters Win, Home Owners Lose: Revealing the Biggest Scam in America.
Most of my research was based on reference materials. The Statistical Abstract of the United States (2001 through 2009) served as a vital resource. Other sources included the annual Retirement Confidence Survey (RCS), current events, personal experience, and clients’ contribution.
Q: If a reader can come away from reading your book with one valuable message, what would that be?
Common wisdom suggests that home ownership is one of the best pathways to financial prosperity. In reality, however, the concept works against people’s goals and expectations. Most people lose money on the property, often without realizing it. Instead, a person can be equally safe, comfortable, and wildly successful by choosing to rent while investing the extra money that would be “wasted” on a home.
Q: Can you give us a short excerpt?
The Passion for Home Ownership
In the American culture, the passion for home ownership defies logic. Somehow, we’ve been impregnated with the idea that until we buy a house, our lives remain incomplete. Never mind how much education we have, how successful we are in other areas of our lives, or what position we hold in the community. Until we can say things like, “my home, our house,” etc., we continue to have feelings of hopelessness and inadequacy. Those who seek to become home owners are not necessarily homeless. Most of them are renters who live in comfortable, adequate housing conditions but have grown to dislike their situations because of cultural pressure. Renters have been branded as hopeless cases who will amount to nothing as long as they keep renting an apartment or a home from someone else.
Branding renters is no accident. In fact, it is a well-developed and orchestrated marketing system designed by the housing industry
to target renters regarding their basic needs. With help from its enabling allies, the industry has successfully labeled renting as an
undesirable and foolish lifestyle that provides no benefit. Those who rent are made to feel that they are fighting a losing battle—throwing money down the drain each month. Consequently, renters are on a mission to become home owners and hope to change their fate in life forever.
In the beginning of the twentieth century, less than half of Americans owned their homes. From 1900 to 1930, the home ownership rate hovered around 46 percent. Then came the Great Depression in the 1930’s, and many home owners lost their homes. The rate dropped to 43 percent. Two decades later, the rate dramatically increased to more than 60 percent and has continued to rise.
Much of this increase can be directly attributed to people’s eagerness to own homes. Various national surveys have given us clues into the mindset of Americans regarding home ownership. In 1996,mFannie Mae reported that in a thirteen-to-one margin, Americans would rather own a home than drive a new car. Almost 70 percent of the respondents said that they would put off retirement for ten years in order to own a home.
When the same survey was conducted in 1998, Americans continued to express strong desires toward home ownership. Six in 10 renters said that buying a home ranked between a very important priority and their number one priority in life. At the time, a 30-year fixed rate mortgage was 7.2 percent. That was high compared to what we’ve seen in recent years. Even then, 65 percent of Americans admitted that the timing was perfect to venture into home ownership.
Prior to the housing crisis in 2006, Americans were prepared to meet any challenge to own a house. In 2003, a Fannie Mae survey found that 67 percent of those who responded believed that it was a good time to buy a house, and 61 percent indicated that buying a house was a safe financial investment. During that time, housing sales had risen to an all-time high; mortgage interest rates had dropped to the lowest levels since 1960; and mortgage initiation had climbed to 40 percent from the previous year.
By 2004, the Department of Housing and Urban Development (HUD) reported that the home ownership rate had broken all records. Nearly 70 percent of all existing housing units were being occupied by owners. In subsequent years leading up to the end of 2005, all departments within the housing market had experienced record-breaking results. New home construction topped the million mark and continued to climb. And although the median price of new and existing homes continued to skyrocket, Americans kept buying houses at record levels.
At the end of 2005, the housing market single-handedly accounted for 16 percent of the United States Gross Domestic Product (GDP). The estimated value of housing stock was $15.5 trillion—32 percent of the total wealth of the United States, and after subtracting mortgage debt obligations, home owners’ equity had increased to $10.9 trillion. If there was a time for people in the real estate and banking industries to celebrate, this was it. Both the housing market and the mortgage industry were flourishing.
But, we commonly say, “everything has its price.” Past all the business activities and money, there were several problematic issues brewing that few people took time to consider. One of which was the personal sacrifice that some Americans made in pursuit of home ownership.
Q: In your own experience, is it hard to get a nonfiction book published today? How did you do it?
It is often said that writing a book is easy; publishing it is hard. This concept is partially true since writing itself is not easy. These days, any book can be published with money. But for one who has little or none of it, reaching the public with a message (fiction or nonfiction) can be difficult. My approach has been self-publishing through a reputable publishing house and using a systematic approach to promote the book. I am currently using, or have plans to use, the following mediums:
- Partnership: Forming alliances with companies who believe in the spirit or philosophy of the book.
- Radio Interviews: I believe, with the right message, one can reach a wide audience quickly, in the least expensive way.
- Publicity: Publicity is the next best effective method of promoting books. I plan to experiment with various press releases at regular intervals, hoping to obtain free national press coverage through print and broadcast media.
- Social Medi This medium has worked well for some authors. I’m currently experimenting with it.
- Book Reviews: Knowing how others feel about my book is important in the on-going effort of promoting it. Independent reviews are known to facilitate book sales. I’m continually seeking ways to get additional book reviews.
- E-mail Marketing Campaigns: Opt-in e-mail marketing is another good way of reaching people for book sales. The results are more effective when the list belongs to the author.
Q: What’s a typical day like for you?
The early morning hours (times vary) are devoted to writing; late morning and afternoon are spent running Writers Publications (my own publishing firm); and late evening is spent on more writing with an hour or two reserved for some television entertainment.
Q: What’s next for you?
Currently, I’m revising my first book, Are You Financially Checkmate? I’m also in the process of writing a book series for men, covering all aspects of how to become the best husband, father, role model, and leader.
Thank you so much for this interview, Tom. We wish you much success!
My pleasure. Thanks for the opportunity to speak with you. Here is one of my websites: http://www.renters-win.com/