We have received some helpful torments in response to the two articles on transfers and cost of living in the June 25 and July 2 Pastor's Reports. We appreciate the input that has been sent in and welcome any of you who would like to, to send in any ideas or information that you feel should be considered. This would help us in writing anything in the future on this subject by pinpointing specific areas of interest and concern.
One important area that needs to be addressed is the buying and selling of houses by those in the field ministry A house is a major investment. As in any investment, the greater the potential return the greater the risk is likely to be. Real estate transactions are no exception and for the ministry the risks inherent in buying homes can be even greater than normal due to the periodic requirement to transfer from one area to another.
As explained in Pastora1 Instruction 4.3.4 covering relocation, the Church will try to leave a man in an area for a minimum of four years. However, this is not always possible. The Church's current policy is to extend special help to those who are required to move before they have been in an area four years. In the future, we may be able to expand relocation benefits; but our policy will never cover all possible losses. A study is now being done to see if changes should be made in the relocation policy. Various approaches to deal with the problems are being considered to determine what would be the most effective policy — considering both the needs of those being transferred and the costs to the Work.
Even with an ideal relocation policy, buying a house is still going to represent some degree of risk. Anyone who buys a house must be willing to personally shoulder that risk or forego doing so. The Ministerial Housing Allowance — established by the government to help ministers who don't live in a parsonage — does give the ministry a sizable tax break. This is especially true for those buying a house since the mortgage interest expense can legally be deducted twice from taxable income — once as a part of the house allowance and a second time as interest expense. The dollar value of this tax break has been conservatively calculated at $1,000 per year for the average minister who owns a home. This, of course, does enable the ministry to assume a somewhat greater risk in the housing market. The tax savings could also be considered at least partial compensation for the loss incurred by having to move every 4-6 years.
The intent of all this isn't to say ministers shouldn't buy homes since in this time of inflation it can be a very practical investment, but we would like to sound a note of caution and discuss the risks that exist in home buying.
Several ministers have suffered rather severe losses in the housing market. A few general points from them may help you avoid similar problems, In buying a house, serious consideration needs to be given to its future salability. A house doesn't have to be a multitowered stone castle with moat and drawbridge located at the top of a mountain to be harder than normal to se11. Such things as an awkward floor plan or a non standard architectural design, etc., can substantially affect salability. Even though you may be able and willing to put up with these difficulties, others may not be willing to do so. Such a home is a poor investment.
It is always best to buy a home with the thought in mind of how it will sell. Also, with the price of gasoline going up, locations distant from towns, shopping centers, and usual places of employment may be less attractive. A house that is the most expensive one in the block is generally a poor investment. Such a home will not hold or increase its value as well as the houses around it. While it tends to increase the value of the houses around it, the surrounding houses tend to depress its value.
Another problem in selling is setting a realistic price. In a usual housing market, the higher the price the greater the period of time it will likely take to sell. Therefore, the time available for selling a house needs to be considered in setting a price. It is best to be able to sell your house before you move. A vacant house does not sell as well as one being lived in. Also, the risk of vandalism and maintenance problems increases substantially. The normal risks resulting from changes in market conditions, both in price and demand, need to be kept in mind as well.
We'll have more to say later on the subjects of transfers, living costs, and housing as we develop information. If any of you have specific topics you feel should be discussed or want to see a specific viewpoint discussed or clarified, please let us know.
ADVANTAGES AND PITFALLS OF HOUSE BUYING
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