Is Home Ownership a Good Thing? Part II

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Andrew Maynard plug in housing

When I asked Is Home Ownership a Good Thing? a few months ago, the consensus was very much yes. Now some thoughtful people are coming down on the other side. Richard Florida:

Our reliance on single-family homeownership is a product of the past 50 years – and the experiment has outlived its usefulness. Not only is it now readily apparent that not everyone should own a home, and that the mortgage system is a big part of what got us into the current financial mess, but homeownership also ties people to locations, making it harder for them to move to where work is. Homeownership made sense when most people had one job and lived in the same city for life. But it makes less sense when people change jobs frequently and have to relocate to find new work.....Imagine a future where people live in plug-and-play rental housing units – able to move quickly when they change their jobs, with many shrinking their commute to a short walk or bicycle trip and many others able to trade in their cars for accessible mass transit.
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Archigram Walking City

Paul Kedrosky:

The mobile American labor market breaks down when housing prices fall. Why? Because people will likely move less frequently, if at all. Tearing yourself away from a house when you know you are going to lose money on the sale (assuming you can sell it) is no easier than selling a stock when it is down, and there are plenty of reasons to think it's harder. What does the evidence show? According to some new research, using data from 1985-2005, money-losing homeowners were 50 percent less likely to move than was otherwise the case.

Should we care? Absolutely. By way of context, about 12 percent of US homeowners move in a typical two-year period, making Americans among the most mobile citizens of any developed economy in the world. People move for a host of reasons, but most common among them are economically driven factors, like a new or better job. Economists generally approve of that sort of thing, as it often leads to higher wages through better matches in the job market—you obtain a job more closely fitting your skills and experience, so you are paid more.

Less mobility means worse matches in the labor market—the best person for the job isn't always hired; people earn less overall—and that represents a kind of tax in the economy.

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Achieving Density in Prefabricated Housing

It is time for North Americans to be more open to other forms of tenure, to co-housing, to co-op, to the trailer park model of tenure. The key argument for home ownership, that is is the best investment you will ever make, is being questioned again. What are the alternatives?

5 Alternatives to the Buy vs Rent Question
Is Home Ownership a Good Thing?
Paul Krugman on Home Ownership

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