A key aspect of resetting the U.S. economy is a shift from homeownership to rental. The U.S. homeownership rate is already coming down on its own, and metro regions with about 40-45 percent renters and 55-60 percent owners appear to have greater flexibility in dealing with economic transitions and higher levels of human capital and higher incomes as well. But rentals can also play a role in urban revitalization. It used to be that rental units were converted into condos. But now, in downtown Miami, high-end condos are being converted into rentals. And it’s bringing lots of young people, empty-nesters, and even some families back downtown, according to this Bloomberg report:
The 7,000 unsold condos in Miami’s core – a symbol of a building boom that collapsed and dragged the city into recession – are filling up and giving life to neighborhoods that previously closed after dark. New, year-round residents are cramming into restaurants, nightclubs, and bars that didn’t exist a few years ago, and enjoying a lifestyle made possible in part by developers and banks seeking to recoup losses by renting luxury dwellings until the market recovers…
The unsold condos represent almost a third of the 22,079 units in 75 buildings, mostly opened after 2004, tracked in a study released in March by the Miami Downtown Development Authority… Occupancy rates in the new buildings, including owner-occupants and tenants, increased to 74 percent in February from 62 percent in May 2009, the study shows.
The development authority estimates that the population of Miami’s urban core jumped to about 70,000 from 40,000 since the 2000 census, said authority spokesman Robert Geitner.
“For us, it doesn’t matter whether they rent or buy,” said Miami Mayor Tomás P. Regalado. “The more people, the more business, the more safety, the more progress”…
Miami is turning into something that Florida has never had: a densely populated city where professionals live and work, said Alan Ojeda, whose Rilea Group recently finished 1450 Brickell Avenue, one of three new office towers in the city’s urban core.
July 14th, 2010 at 8:02 pm
The same thing happened in Portland, on a smaller scale. New condo buildings downtown, and in the Pearl & South Waterfront, have become rentals and I think are attracting younger professionals.
“Miami is turning into something that Florida has never had: a densely populated city where professionals live and work, said Alan Ojeda, whose Rilea Group recently finished 1450 Brickell Avenue, one of three new office towers in the city’s urban core.” I wonder if the same thing will happen to other major sprawl cities like LA or Dallas.
July 14th, 2010 at 10:52 pm
Then it would be sound economic policy to make property-ownership a good financial investment for landlords. How could this be done without penalizing the renters?
July 15th, 2010 at 9:27 am
Your work on home ownership over past months is highly interesting and much needed.
However, do you think the issue is really about home ownership or is it more about over investment in housing (an unproductive use of investment dollars)? In a sense, those who are over their head in their mortgages simply invested poorly in an asset that was over valued. Seems to me its quite similar to those who invested in over valued internet companies in the last bubble.
Second, if more people become renters, that does not necessarily mean that less investment dollars are being used on housing assets rather than on the import replacement cycle. I mean someone owns the housing whether or not its occupants own it… right?
For brevity’s sake, I am wondering if you think the problem is really the renting to home ownership ratio or rather overly loose credit and unwise investments made in housing assets… or both.
July 16th, 2010 at 12:18 am
Condo-to-apartment conversion seems to be happening on a large scale here in Chicago as well.
We were able to rent a newly converted place for probably 30% less than we would have paid a few years ago. Landlords seem to be much more amenable to 6 and 9 month leases as well.
July 19th, 2010 at 11:14 am
Fewer people can afford ownership after suffering from several years of severe recession. As soon as the economy rebounds, people will buy again.