My Wall Street Journal column today asked: “Is Homeownership Overrated?“ And NPR’s Planet Money’s Question of the Day asks: “Is Owning a Home Overrated?”
The rate of homeownership in America is already starting to fall back on its own. From a high of almost 70% during the bubble years, homeownership has fallen to roughly 67%; slightly less than 39% of Americans between ages 18 and 35 own their own home, down from 43% in 2005. The Urban Land Institute projects that homeownership may fall to 62% over the next decade or two.
I’m not saying that Americans should give up on homeownership. Those who plan to stay in one place, who have secure jobs, and who can afford to should still buy homes. We need only tilt the balance, reducing the current homeownership rate from our current rate of just over two-thirds to perhaps 55% or 60%, comparable to that of the most economically vibrant regions. It’s in our economic interest to help make that happen.
A new study by the American Apartment Association (via Bob Massey) provides data from a May Harris survey of 2,000 Americans finding additional evidence of an ongoing Great Reset around housing.
- More than three-quarters of those surveyed felt renting was preferrable to owning in the current economic environment.
- Nearly two-thirds cited not having responsibility for major repairs or maintenance as the primary advantage for renting.
- 50 percent said renting offered financial reasons for preferring to rent.
- A third cited the unpredictable real estate market and not being susceptible to foreclosure.
- 60 percent of renters plan to continue renting their current residence or rent new residences within the next year, and just 12 percent have plans to buy.
June 8th, 2010 at 7:52 pm
I think people in that age bracket are starting to understand the dangers and inefficiencies of suburban living – where the majority of houses are bought. Young people want to live in urban centres, where owning a ‘house’ is no longer financially feasible (which explains the boom in Condo-development). With growing concerns over the environment as well, the suburban lifestyle looks less and less appealing.
June 9th, 2010 at 7:58 pm
Despite its disadvantages, homeownership pays one big dividend: equity. Home equity is one of the most widely held sources of wealth or assets in the nation and may be most important for lower income families, who can least afford to spend a lifetime in rental housing, owning nothing in the end. Opportunities to own affordable homes provide assets, however modest, for families and benefit communities by building neighborhoods in which residents have a long-term investment. For a plain English explanation, visit http://www.habitat.org/how/why.aspx
June 11th, 2010 at 3:27 pm
Renting is a service I gladly pay for. We spend about $40 a day for use of a nice three bedroom townhouse on a quiet street, with a private yard, a larger park for kids in the complex and a city park 5 houses away. The AGO is at the end of the street. Walk to work, got rid of the car and no equity buried in concrete, dirt and drywall. I like my equity earning interest and dividends and accessible when I need it. I also like having money set aside for a surprise like a weekend trip to Manhatten, or a night at the Opera instead of a blown water heater or a leaky roof. I know many homeowners and they like it. It enables you to be fixated on a world of a couple thousand square feet knowing you need not think beyond that world. It’s very comforting, like being a religious fundamentalist.