The New York Times:
The percentage of households headed by homeowners, which soared to a
record 69.1 percent in 2005, fell to 67.8 percent this year, the
sharpest decline in 20 years, according to census data through the end
of March. By extension, the percentage of households headed by renters
increased to 32.2 percent, from 30.9 percent…The bloom is off of homeownership,” said William C. Apgar, a senior scholar at the Joint Center for Housing Studies at Harvard University who ran the Federal Housing Administration
from 1997 to 2001. “We’re seeing more dramatic growth in renters and a
decline in the number of owners. People are beginning to understand
that homeownership can be a very risky venture. ”Mr. Apgar said
the Joint Center had predicted an increase of 1.8 million renters from
2005 to 2015, given expected population trends. Instead, they saw a
surge of 1.5 million renters from 2005 to 2007 alone. In the first
quarter of this year, 35.7 million people were renting homes or
apartments, census data show.
The full story is here. Graphic from the NY Times.
The article focuses mainly on how the mortgage meltdown has made it harder for low income families to buy homes, shifting them into the rental market. This, for sure, is part of the issue. But the deeper and more fundamental issue for me is that homeownership which was a key element of fordist industrial society now looks to be increasingly out of sync with the flexibility and more compact, denser urban form required for a creative, idea-driven economy and society. Homeownership, research shows, impedes mobility. Single family ownership is often associated with sprawl. In Who’s Your City? I speculate that the creative economy will require new forms of housing tenure that are more like commercial leasing.
In my own case, I recently bought houses in DC and Toronto. The reason? Not because I’m in love with home ownership, but because we could not find the kind of unit we want on the rental market. So we bit the bullet and took on the “extra” cost for lifestyle. I look at a market like Miami Beach. It is makes great sense to rent in that kind of market, and many would be willing to pay a premium for furnished short term rentals. But most properties on the market there are a different kind of short term rental, individually-owned units whose owners are renting them while really trying to sell. So often times people suck it up and buy, just to avoid the hassles of searching and finding a new place season-to-season.
Seems to me what the market requires is large scale rental companies who can provide a range of rental properties tailored to tenant tastes and preferences. This kind of thing exists in large cities, like New York and DC, but often the units are quite generic. When I lived in Pittsburgh I came across a few “boutique” development-rental companies who provided this kind of offering. I’m sure there are others elsewhere.
But, with the condo glut across many American cities, seems to me a perfect social and economic space for this kind of housing alternative to emerge.
Any other examples or thoughts out there.
June 23rd, 2008 at 8:34 am
Very interesting, we’ll have to see if these trends hold when the market bounces back. The rental market is tough. I buddy of mine put one of his rentals on Craig’s list the other day and received 38 calls the first hour. It’s tough out there for renters.
I would also contrast these findings with those that show increased entrepreneurship and home offices. Starting a company somewhere makes it less likely that one will move from the place.
Also to be considered is the powerful mortgage interest tax deduction that led me to buy my first and now second houses. Also the capital gains exemption if you buy and resell and have lived in the house during at least 2 of the last 5 years. Real estate remains a powerful investment vehicle, even in today’s market for those who know what they’re doing. Unfortunately, most of the people caught in the real estate bubble either took speculation to reckless extremes or were those convinced by thirsty realtors and mortgage brokers to buy houses they couldn’t afford via borrowing and lending schemes.
All that said, I resisted buying a house for a long time for all of the reasons you point-out so that sentiment certainly is out there, whether it develops into a full-blown trend and cultural shift remains to be seen.