Chris Brogan on The Great Reset:
Richard Florida posted about The Great Car Reset, talking about how America’s passion for cars might be waning a bit. In another story, with video, Florida talked about how we should rethink home ownership …
I grew up thinking home ownership was the goal. I have a loft in northern Massachusetts that’s about 955 square feet, with a wife and two kids and two cats in it. It’s a wee bit small. So, I’ve been thinking about homes and clicking the occasional real estate link that Kat sends me. But do I want to own?
We use to think homes were important places to store equity. Wow, that sure didn’t work out for a lot of people in the last few years. Even if a home stores equity, you can’t actually get at that money until you sell, so it’s money that’s not being used. In essence, it’s not earning you anything if it’s just sitting there in the home, still. So, a home as a simple residence isn’t exactly a great investment these days (at least by some people’s thinking).
What about cars? Cars depreciate the moment you buy them. They rarely go up in value. They require maintenance, parking fees, etc. And we usually own cars when we live in the suburbs, but that brings us back to the real estate question, and whether or not we even want to be in the suburbs any more. If we reurbanize, if we rethink our cities, if we rework how we work, would we need to throw $20,000 or more into something that just moves us from A to B?
I’m just throwing this all out there to talk about, to think about.
June 7th, 2010 at 11:22 am
i still own my home in MI but i am starting to re-think homeownership as a whole.
if i do buy another home, it will be new construction (green) with multiple family options. i won’t invest again unless i can reap benefits immediately and in the long run.
June 7th, 2010 at 12:01 pm
Chris brings up some interesting points. A “Rethink” comes on the heels of our dismal past 2 years and worries about every issue. Maybe rethinking every assumption does more harm than good. I don’t diasgree that these assumptions are based on the new realities and remind me that maybe it could be termed as frugal or simple. The nation has little tolerance for live and let live. Maybe that message needs to be spread to help tone down rethinking, investigationg, vetting and adressing every concern that is brought up. My 2 cents.
June 7th, 2010 at 12:10 pm
I think it is an interesting idea, dissolving our ownership society. There is a certain individual power we can gain if we own property. No longer beholden to a landlord or mortgage holder. Certainly we would have a stronger community and country if we all had such power. Unfortunately most “homeowners” will never actually realize this level of power because they will take out 30 year mortgages which in all likelihood will not be repaid in full, people usually move to another 30 year mortgage before the first is paid.
I believe the solution is to provide housing that is much smaller and less expensive for a majority of our population that will allow them to own, not in 30 years but in 10. Is this possible? Would people live in a smaller multifamily unit that they own or do they simply prefer renting a larger single family unit the rest of there lives?
June 7th, 2010 at 3:44 pm
Chris does raise some interesting points and commenter’s; Jenifer, Stefan and Kristian tend to echo that sentiment. One of my key take away from “The Great Reset” is the change in the essence of homeownership. Traditionally (from the 1950’s to 2000) a home owner could almost be assured an appreciating asset, however, now the trajectory of that asset is far less certain.
The car has always been a depreciating asset and it was an also essential part of suburban life so people continue to buy it. With the population migrating in greater numbers from the suburbs back to the downtown core homeownership is becoming far more speculative.
Is a house is the new car? People will continue to pursue homeownership because they need a place to live, but it is no longer an investment that will guarantee you a comfortable retirement, in fact quite possibly the opposite.
June 7th, 2010 at 5:38 pm
I don’t agree with Richard Florida’s take on home ownership. If it is true that economic production will be concentrated in mega-regions, and particularly in the densest parts of those mega-regions, than it makes a whole lot of sense to buy property in the densest parts of those mega-regions. Just look at real estate prices in NYC proper and Seattle, Portland, San Francisco, etc. over the past twenty years, or even the past ten years. I am willing to bet all of those markets have vastly outperformed stock markets. What doesn’t make any economic sense is buying a home in any non-creative class city, or in the least dense parts of smart mega-regions. Of course, and what Richard Florida knows but hasn’t publicly acknowledged, is that this means that home ownership only makes sense for the well to do. I am not sure that such a world is fair or just, because it seems as if it will create a world in which the rich monopolize public goods and public transit, and exile the poor to suburbs which are not well connected to the central city.
June 8th, 2010 at 4:46 pm
Paul makes an excellent point, which is connected to Richard’s observations about the “spikiness” of cities. I believe it was in a previous book that he noted how the cities with the most dynamic economies also tended to have the largest discrepancies between rich and poor.
If you can find a way to scramble yourself into ownership in great neighbourhood in a San Francsico, Seattle or Vancouver, maybe even of rental suites (or a home with a mortgage helper basement suite), you’ll do well. If you can’t, you’ll be paying high rents and will struggle to get ahead as long as you live in that city.
June 9th, 2010 at 11:34 am
Why should anyone else own the place where you live ? Who should own the place where you live ? After recommending renting for others, why does Richard own his own home ? Everone who can rub two brain cells together knows, that after twenty years of renting all you have is a pile of receipts. But if you buy, you will have equity, a place to which you can retire, and a legacy to pass on to future generations.
June 10th, 2010 at 12:33 am
Some time ago I had started a draft blog post on the notion of ownership triggered by some other posts on tradeoffs between desires. Seeing this and the previous piece by Dr. Florida (whose work I’ve studied extensively in my political science graduate program) pushed me to finish it up: http://bit.ly/btsT6k
Serendipity of the web being what it is, I then saw this post about marketing to millennials and their move away from car culture: http://millennialmarketing.com/2010/06/millennials-are-not-romantic-about-their-wheels/
@BarbChamberlain
June 10th, 2010 at 2:18 am
Cars are not such a bad investment. Mine is approaching 10 years old and looks almost new with minimal mechanical fixing – (thank you, good old Toyota). Am looking forward to electric cars which should do even better. The alternative would be wasted hours, even days, struggling with public transport or else restricting myself to walking distance.
June 10th, 2010 at 11:13 am
We need to create the right balance between car use and public transit. When I worked, the bus could take me very close to the office and was easier than driving. Now that I am retired, I use the bus and feet whenever possible; however, to take the bus to pick up my granddaughter to take care of her during the day is a 30 to 40 minute car round trip versus 2 1/2 hours on the bus. So I keep my car. Cities need to encourage people to use small electric cars perhaps through better parking rates as a supplement to the bus system which is best for heading to major destinations.
June 11th, 2010 at 3:40 pm
Six years ago, I and a friend who had sold her car share company Autoshare decided to look into a new car sharing co-op model for public housing, co-ops and condos. The footprint is small and the costs are very modest, especially if it was amortized in a mortgage or as part of the condo, apartment service fees. It didn’t go far as I lost interest in cars. I got rid of my car and found I didn’t need or want a car even if was given to me or if it was less than a transit pass. I am no longer an autoholic. Four years clean and counting.
June 16th, 2010 at 3:53 pm
Home ownership is not the financial panacea it is made out to be. There are extensive costs involved [roofs,paint, etc.] and there is a tendency to have to move far away from work to be able to afford the house you want [especially for younger workers]. There is also the risk of buying high which could destroy any future equity build-ups. The transaction costs of buying and selling are also very high.
Having said all that, for some people, in some areas, owning your own home is a psychological imperative that will create some financial stability.
Personally, I think you are better off owning investment real estate in those places that have positive job support and leveraging that into owning your own personal real estate.
December 4th, 2011 at 12:17 pm
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