Should homeownership be encouraged? The Economist wants you to join the debate!
The proponents of renting argue that homeownership should not be promoted since it slows the economy by tying the work force to one location. To encourage a fluid, adaptable economy, people must be able to pick-up and move to find jobs. Evidence from both Europe and the United States indicates countries with a more even balance between homeownership and renting have lower unemployment rates and better mental health and satisfaction among their citizens than countries with very high homeownership rates.
Proponents of homeownership argue that it promotes social stability and community involvement. People who own homes are more likely to maintain their common areas and seek to improve local schools. Children of homeowners are more likely to excel academically and graduate from high school.
While homeownership proponents acknowledge that homeowners are less mobile than renters, they argue that people already prone to stay in one place are influenced by this desire to purchase a home. Homeownership is a result of preexisting community roots, a sign of a chosen lifestyle rather than the catalyst for it.
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A combination of post-boom housing factors, including damaged credit and insufficient employment has made homeownership unfeasible for many would-be homebuyers. For others, especially the younger Generation Y, the employment opportunities and local amenities of urban life have caused them to favor renting over homeownership.
The direction of California’s future housing market will impact the future of real estate practice. Will there be a shift in the client base from sellers and buyers to landlords and renters?
Agents: Let the scholars know what you’re seeing first-hand in California’s housing market by joining the debate online. The Economist is currently soliciting votes and comments. The debate closes September 26, 2012.
Related articles:
Rentals: the future of real estate in California?
Homebuyers feel ready and willing to buy, but not financially able
CA single- and multi-family housing starts
Re: “Should home-ownership be discouraged?” from The Economist
Creating a frame work stating that home ownership slows the economy by tying the work force to one location or not is not the important issue to me. Some people would like to own a home for the obvious reasons and others would rather rent. It is not a matter of choosing one over the other, but having both options available.
If and when jobs become available and employment picks up, I think you will see home sales volume increase; but, in the meantime; yes, for all the reason mentioned in your article, people are suffering, but worrying about their mental health is really reaching for a reason to justify one’s position. You could always blame it someone: lenders, broker, consumers, but why bother.
No one is going to change the system. Adjustable interest rates and slack underwriting standards, should never have happened in the first place. Strange thing though, slack underwriting is still going on.
The underlying (AKA engineering) logic is clear in this article, however – one must understand that in established urban areas that offer a sound market, owners of existing properties now enjoy high demand (AKA higher rents) that keep their older buildings full.
NIMBY has many underlying & complex economic& social factors … one of which could be the short term economic needs of local politicians who may not enjoy the long term benefits of increased density during the short time they are in public office. … This paradox is also clearly illustrated by a lack of funding for other infrastructure investment – all while our bridges fall down – water pipes break open & streets are hyper-jammed.