Homeownership Is Overrated (via NMHC)

Just got the great NMHC newsletter in my inbox, with the wonderful headline, "Homeownership Is Overrated". Many people seem to have trouble conceptualizing a marketing campaign for renting and against home ownership, but NMHC's newsletter has given us another strategy: Feeling stuck in the mud, chained to a rock, or bound to their mortgage when opportunities await you elsewhere. Here's the piece, originally from the Wall Street Journal:

Richard Florida, director of the Martin Prosperity Institute at the University of Toronto, espouses in this opinion piece that with an idea-driven economy, workers must remain mobile to seize opportunities where and when they surface. When manufacturing was the foundation of the economy, it made sense to tout homeownership, but now, Florida says homeownership can become a disadvantage. Homeownership rates are often highest when housing prices are lowest, and in cities such as Detroit, with the highest rates of homeownership, lower economic activity and incomes prevail. He says, "Far too many people in economically distressed communities are trapped in homes they can't sell, unable to move on to new centers of opportunity."

Meanwhile, cities like Los Angeles where homeownership rates are lower, economies are healthier and incomes are higher; additionally, Florida says the workforce is more professional and has higher levels of happiness and well-being, according to Gallup. Younger residents in these cities prefer to rent, and the presence of higher incomes often increases area housing prices, pushing homeownership out of reach. However, "With fewer residents locked into mortgage payments, there is a greater degree of flexibility and resilience in the face of economic shocks and downturns. Workers can downshift as needed or move to take advantage of new opportunities. When the economy rebounds, it's easier to attract new workers to the area if there is an abundance of high-quality, affordable rental housing," Florida says.

Rather than simply give up on homeownership, Florida suggests that a balance between it and renting is necessary to stabilize the economy, keeping homeownership rates between 55 percent and 60 percent. To accomplish this balance, he suggests ending such measures as federal homeownership subsidies and the mortgage interest tax deduction and encouraging more and better rental housing. The housing industry has seen profitability in the multifamily housing sector, while there are thousands of unsold condos and foreclosed houses, which could be turned into rentals. Florida suggests that the American Dream be modified.

From "Homeownership Is Overrated"
Wall Street Journal (06/07/10) P. A17; Florida, Richard
Is the "iron hot"? Is it time to build a marketing campaign for the renting lifestyle?

The answer to your question is "YES" Brent! The recession has only proven that there are many people who cannot, or should not, buy a home. This doesn't mean they aren't good people or aren't succesful or ambitious, but as the article you cite makes clear, many people get trapped in homes and stick with unsatisfying or low-paying jobs just to hold on to their home. I have always felt the National Association of Realtors, seemingly in collusion with US tax policy, promotes home ownership as the be-all, end-all when there are many people it just isn't right for. Thanks for sharing the article with the group!

Thanks for chiming in, Christopher! And we (MFI) have decided to reach out to NAA and NMHC and see if there is interest on their side with a pro-renting lifestyle marketing campaign. I'll keep the community updated on what comes of it!