May 1, 2011


A Dream Endangered. (Yeah, So?): Has homeownership been oversold as an essential part of the American Dream? As an investment or a social good, it probably has. But it’s no less alluring. (Paul Starobin, March 17, 2011, National Journal)

But even a determined policy effort to make renting more appealing, should the government try that, is apt to encounter powerful demographic and cultural forces that will continue to take homeownership’s side. For one thing, aging baby boomers are entering the time of life when people are most apt to own a home. This is a natural, if not unalterable, generational progression: These days, U.S. homeownership rates range from a low of 39.2 percent for those age 35 and younger to a high of 80.6 percent for those 65 years and older, just slightly ahead of the 79.2 percent rate for 55- to 64-year-olds.

As for the longer run, as noted by George Masnick, a demographer who consults for Harvard’s Joint Center for Housing Studies, there is no evidence that single young women and men have retreated from seeing themselves as future homeowners, whether married or not. Some get help from a nongovernmental source. “A lot of buyers are getting gifts from their parents,” reported Brian Burke, a real-estate agent in South Windsor, Conn. He and others say that in a market suited for bargain hunting, first-time homebuyers remain as determined as ever to get their deals done.

Other trends, though less robust, are working in favor of renting. Immigration, for one, could surge as the economy recovers. Foreign-born dwellers currently make up about a fifth of all renters. The number of Hispanics who rent soared from 1.9 million in 1980 to 7 million in 2009.

But in the end, the future of homeownership will be determined, above all, by the whims and wishes and calculations, logical or not, of the millions of Americans who grapple with a subject that is overwhelmingly personal. Here in central Massachusetts—and presumably elsewhere, too—the notion that homeownership is overrated doesn’t play well.

“I’m throwing away $550 a month,” said Kate Egnaczak, a 28-year-old triathlete with a marketing job at an art museum, speaking of the rent she pays for her studio apartment. “I get no return on it. I have no investment.” So she’s scouring the market for a fixer-upper for under $100,000. Raised on a farm, Egnaczak has an idiosyncratic reason for wanting her own place: She plans to keep chickens to produce fresh eggs for breakfast. (Try asking your landlord for that!) Her parents have offered to help with the down payment; they took a hit to their retirement savings accounts in recent years and now view real estate as a better bet than the stock market.

Clearly, the ugly end to the housing boom hasn’t sated Americans’ appetite for owning a home. Indeed, it may wind up producing a more-settled class of homeowners, a throwback to the pre-boom days, before house-hopping became the norm.

In the bygone epoch of rapid price appreciation, Brigid McKenna, 30, and Dave Carlson, 36, physicians who are engaged to be married, might have first invested in a starter home as a stepping-stone to attaining their dream nest. Instead, they decided to stay in their rental until they could afford to buy (for $415,000, with 5 percent down) a robin’s egg blue New England colonial. The lovely 1927 house is in the same town, Shrewsbury, in which Brigid grew up. Over coffee and cookies in their new home, they mapped out their plans, short-term and long—to remodel, to adopt a dog from the rescue shelter, and to send their future children to the Catholic parochial school across the street that McKenna attended as a girl.

How long do they plan to stay in their house? “Forever,” she said.

The American Dream of homeownership may have been oversold—perhaps vastly oversold—but there remains no shortage of satisfied buyers.

...we have a housing shortage.

Posted by at May 1, 2011 6:58 AM

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