Why the U.S. Needs to Fall Out of Love With Homeownership

Mott the Hoople said:
I didn't see anything in here disparaging home ownership. This is an excellent point the author makes;

"Homeownership continues to make sense for many Americans. But for those whose income is limited or who are still building their careers, a house can be an anchor than limits their ability to move to where jobs are. "

I've done fairly well in my career. I've mostly earned more than the median income for someone with my educational background and experience but until fairly recently either remainng employed or taking advantage of opportunities for advancement often required relocating. Had I been married to a mortgage through a significant part of my career I would not have advanced as far as I have.
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I think it did, he claims he isn't, but then later makes a statement that it undermines productivity, etc.
 
ZappasGuitar said:
You started a thread about home OWNERSHIP...not INVESTMENT property.

You claim to understand the difference between the two but use them interchangeably over and over in this thread.
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Yes I did but when the thread turned to Landlords and people paying rent the discussion turned to investment property. I don't think anyone here is confused about the difference or unable to follow along.
 
ZappasGuitar said:
There's a couple examples right there. Your ignorant refusal to forgo the derision when referring to Obama Snarky BS = dishonest debate.
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LOL, isn't Obama "The One"?

"Snark" isn't BS, BTW, or otherwise you'd have to accuse your fellow lefties of "dishonesty" pretty regularly.
 
cawacko said:
I've always been a big believer in home ownership. It's part of the American Dream and communities with higher percentages of home ownership were stronger. I will say though in the last several years I've started to question my belief a little. Part of that is seeing the economic impact of our government pushing home ownership too far.

This article compares U.S. home ownership and overall economic performance with other countries. It also compares home ownership rates within U.S. cities and their overall economic performances.



Why the U.S. Needs to Fall Out of Love With Homeownership


"The most tangible cornerstone that lies at the heart of the American Dream, at the heart of middle-class life," Barack Obama declared in a speech this summer, is "the chance to own your own home."

Politicians and pundits across the spectrum regard homeownership both as the best investment a family can make and a measure of national prosperity. But a significant majority of Americans believe differently. According to a 2012 Pew survey, 86 percent of Americans now believe the key to a middle-class life is a "secure job," almost double the share (45 percent) who say the same about owning their home. To compare, seven out of ten respondents to a Time/CNN/Yankelovich survey back in 1991 said that homeownership was essential to middle class membership, while just one-third said that a white-collar job was required. Since 2004, the overall rate of homeownership in the U.S. has declined from 69.2 percent to 65 percent.

To help us better understand just how much we should — or shouldn't — lament the shift away from homeownership, my colleagues at the Martin Prosperity Institute and I took a closer look at the relationship between homeownership levels and the overall economic health. And what we found should make the President and politicians rethink their pro-homeownership stance.

The map above by the MPI's Zara Matheson shows the percent of the population that own their own homes across 41 nations, based on data from Pew which collected it from numerous sources. The Pew data cover 42 nations — all nations that members of the OECD and the European Union, plus Singapore. We excluded Iceland from the analysis based on missing data for other variables, giving us 41.

As it turns out, homeownership rates in the U.S. are relatively low in comparison to other nations. The U.S. ranks 33rd of these 41 nations, slightly below the Netherlands and just above France. Romania, Lithuania and Croatia have the highest levels of homeownership. Switzerland, New Zealand and Germany have the lowest.

The second map, also by Matheson, shows the level of overall economic development, measured as economic development per person for the same countries, based on data from the World Development Indicators. The map is nearly the opposite of the first one.
Countries with high rates of homeownership were significantly less economically productive.

Switzerland, which has the lowest rate of homeownership among the countries Pew studied, is one of the the world's richest and most advanced countries — on this map, an island of dark blue in a sea of green. At the other end of the spectrum, the string of less-developed Eastern European nations, with lower levels of GDP per capita, are also some of the countries with the highest levels of homeownership on the first map. The U.S. and Canada are green on both maps. They combine relatively high levels of economic development with relatively low levels of homeownership.

To get a better handle on this connection between property ownership and economic productivity, my colleague Charoltta Mellander ran a simple correlation analysis between homeownership and economic output (based on GDP) per person. The scatter-graph below plots the pattern. Though correlation is not causation, the trend is striking.


Less developed countries have consistently higher levels of homeownership, while more advanced nations combine higher levels of economic development with substantially lower levels of homeownership. (The correlation between the two is -.40 overall and it rises to -.58 when she removed outliers Singapore, Norway, Luxembourg and Switzerland). American political rhetoric tends to equate rising homeownership rates with strong economic development. Instead, the opposite is true. The rate of homeownership declines as nations get wealthier.

One reason for this may be because people in less developed nations have fewer options of where to put their money. In agrarian economies, land ownership is the basic source and measure of wealth. In more advanced capitalist economies, people have many more investment options. Many of the places with the highest rates of homeownership are in former Communist nations of Eastern Europe.

Lower rates of homeownership rates also appear to follow from urbanization. The scatter-graph below illustrates this, plotting homeownership against the level of urbanization measured as the share of the population that lives in urban areas (the data is also from the World Development Indicators). As people move to cities, they have more options for how to spend or invest their money, and renting is much easier and more common.

Homeownership is highest in the least urbanized nations — Romania, Croatia, Slovakia, Lithuania, Bulgaria. And it is lowest in the nations that are most urbanized — not only the U.S. but also the Netherlands, France, Japan, New Zealand, Germany, and South Korea. The correlation between homeownership and urbanization is also negative (-.37).

This is in line with my own research on U.S. cities and metros. Back in 2010, I noted in The Wall Street Journal that "cities and regions with the lowest levels of homeownership — in the range of 55 percent to 60 percent, like L.A., New York, San Francisco and Boulder — had healthier economies and higher incomes." Conversely, "cities with high levels of homeownership — in the range of 75 percent, like Detroit, St. Louis and Pittsburgh — had on average considerably lower levels of economic activity and much lower wages and incomes."

And numerous studies have found that excessive homeownership significantly distorts the economy, diverting investment away from much more needed areas like technology and knowledge.

Homeownership continues to make sense for many Americans. But for those whose income is limited or who are still building their careers, a house can be an anchor than limits their ability to move to where jobs are.

And as Yale economist Robert Shiller has noted, the real rate of return to owning a home has been close to zero for the past century, substantially less than the stock market. "Housing traditionally is not viewed as a great investment," he added. "It takes maintenance, it depreciates, it goes out of style."

Of course, I’m by no means advocating that we put an end to homeownership altogether and become a nation of renters. My hunch is a homeownership rate of between 50 and 60 percent is just about right; and that’s not too far from where the U.S. is now. But we can’t hide from the fact that excessive levels of homeownership — either among nations or metros — seem to be associated with lower levels of innovation, productivity and economic development.

I wholeheartedly concur with Columbia University economist Edmund Phelps (I quoted him in my book The Great Reset) when he says, "it used to be the business of America was business. Now the business of America is homeownership.” And, he adds, "America needs to get over its ‘house passion.'"


http://www.theatlanticcities.com/housing/2013/09/why-us-needs-fall-out-love-homeownership/6517/
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This is the movement today in business. They know the public thinks business is on hard times when anyone who can do a simple search knows it's the public on hard times, not the business. But since people keep thinking businesses are on hard times we see businesses cutting benefits, hours and even wages as if it has to. The people at the top are getting record profits at the expense of the workers below. And when the working poor hit bottom their rich employers tell them to get Government Assistance. Then the business gets hit with taxes to pay for that assistance and starts working with for profit Fox News and other for profit Right Wingers to end basic welfare so they can make even more profit.

Money is the root of all evil. A psychiatrist famous with the rich stated that, "The biggest issue rich people have is they just can't get enough. No matter how much they got, no matter how many things they own, no matter how many million or billion they are worth, they want more."
 
Anti-Party said:
This is the movement today in business. They know the public thinks business is on hard times when anyone who can do a simple search knows it's the public on hard times, not the business. But since people keep thinking businesses are on hard times we see businesses cutting benefits, hours and even wages as if it has to. The people at the top are getting record profits at the expense of the workers below. And when the working poor hit bottom their rich employers tell them to get Government Assistance. Then the business gets hit with taxes to pay for that assistance and starts working with for profit Fox News and other for profit Right Wingers to end basic welfare so they can make even more profit.

Money is the root of all evil. A psychiatrist famous with the rich stated that, "The biggest issue rich people have is they just can't get enough. No matter how much they got, no matter how many things they own, no matter how many million or billion they are worth, they want more."
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What? I'll give you credit I had to look at the subject line in a thread I started to know if I was in the right thread. You are freaking random.
 
cawacko said:
What? I'll give you credit I had to look at the subject line in a thread I started to know if I was in the right thread. You are freaking random.
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It's not random if you know anything about Corporate greed kiddo. The Right knows nothing about it because they don't care to learn.
 
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