Recently, the Economist hosted an online debate on the question “Should home-ownership be discouraged?” If the framing of the question seems convoluted to you, you are not alone. One of the debaters, Richard K. Green (formerly among the directors of the Center for Housing Policy), noted that the more common question is whether it should be encouraged. Many readers could not refrain from commenting on the need for a neutral position. The housing bubble and mortgage crisis have shown that a high homeownership rate is not necessarily good for society or for individuals and families, and research has brought some of homeownership’s benefits into question. But should we really consider the opposite extreme?
No. Moving between extremes gets us nowhere. We need to look for a middle ground.
|A consequence of rental undersupply: skyrocketing rents.|
Photo: Flickr user greyfodder (CC BY-NC-ND)
At the height of the bubble in 2004, the U.S. homeownership rate was a record 69.2 percent. Today, it's hovering above 65 percent, at the same levels we saw in 1965, with many analysts expecting it to fall further in the coming years. I believe it's possible that the right set of policies and safe, accessible mortgage markets could bring homeownership rates back near the all-time highs without bringing back the risks that led to the crisis. But that shouldn't be the only goal of housing policy.
As a blog post last month highlighted, the nation needs a more balanced housing policy. There are many good reasons to own a home. For one thing, homeownership can be beneficial for families looking for greater residential stability and a vehicle for building assets. However, if we’re only focused on that, we miss that there are also a lot of good reasons to rent: the flexibility to stay mobile in an uncertain job market, (usually) greater housing affordability, and the month-to-month stability of not facing large unexpected repair costs.
A major reason we lack the resolve to ensure an adequate supply of rental housing is because renting is stigmatized. We need to make sure not only that the policy climate and financing system allow for the development and maintenance of the rental housing supply for families at all income levels, but that we focus on losing the stigma through better messaging that articulates why we need robust rental housing.
Let's hope the public doesn't see rental housing vs. homeownership as a zero-sum game. The Economist’s debate ended with 63 percent of readers voting against discouraging homeownership. While that says nothing about the readers’ support of policies that actively promote homeownership, I wonder if we have moved sufficiently beyond the pre-bubble days to stop discouraging rental housing as well.