The housing market continues to malfunction. Oddly, a valuable commodity market with historically low prices, vast inventory options and low borrowing costs is not experiencing a rush. Maybe it’s not a financial problem after all?.
Owning a home has long been part of the American psyche. High home ownership rates set America’s middle class apart from other countries. America’s founders, Jefferson particularly, noted the connection between private property and political liberty. For two centuries, America’s great prosperity has been intertwined with the story of private property .
In the American Dream, people live in houses.
Today, another story is being offered to the public. In this vision, home ownership is not so common. The story is gaining credibility and believers, due to short memories and media-moment attention spans. At the end of this story, however, future American’s don’t own their homes.
There’s nothing inherently wrong with renting. Many people rent at some point in their lives. A few rent for their entire lives. Renting serves an important economic role in a highly mobile society, permitting labor and resources to move freely. Renting provides an early path for young people to strike out on their own, another part of the American dream. In fact, most of us rent lots of stuff: credit cards and car loans are essentially forms of rent.
But what about housing? In the past, owning a home was seen as significantly different than renting. Somehow, when you bought a home, you had “made it” in America. Today, future generations are being told there’s an alternate American Dream. Almost like a type of “housing multiculturalism,” renting, they are told, is just as good as owning. Even worse, home ownership is being portrayed today as almost dangerous: Fraught with predatory lenders, greedy bankers and unscrupulous real estate brokers. Buying a home and owning it is scary.
Night after night we are told that, at the center of the economic crisis, is the housing market.
There are political advantages to telling such a story. Some in government, eager for new sources of revenue, may see a renter-ship society as a new source of disposable – and taxable – income. Renters would have money left over to spend on consumer goods, which would be subject to local sales taxes (or a national VAT). Since they believe a (housing) crisis should not be wasted, it might be worth reading a few lines of their narrative, to see what they have in mind:
- On July 27, 2010, the House of Representatives passed a funding bill for the Department of Housing and Urban Development (HUD) totaling $48.5 billion. The bill provides $17 billion in rental assistance and $9.4 billion to preserve affordable rental units, plus $350 million to improve the condition of public rental housing. A mere $88 million of the $48.5 billion will be allocated to “support home ownership and prevent foreclosure.”
- The Washington Post recently reported some an Obama Administration official’s vision about the future of the home ownership: “In previous eras, we haven’t seen people question whether homeownership was the right decision. It was just assumed that’s where you want to go,” said Raphael Bostic, a senior official in the Department of Housing and Urban Development. “You’re not going to hear us say that….” “HUD Secretary Shaun Donovan has been most out front in the administration in advocating a new approach. “While we continue to promote affordable homeownership, for many Americans, renting will continue to be the only or preferred option,” he told lawmakers recently….”
Ironically, our government resides in the White House; not the White Apartment. It’s not just the Obama Administration that envisions a future of less homeownership for America. Look at other story tellers:
- Within the housing industry, the rental industry is playing off of consumer skepticism about home ownership. David Neithercut, chief executive of Equity Residential, was quoted in the Wall Street Journal saying, “There is “a change in one’s thought process about the benefits or wisdom of owning a single-family home… There is no one in this room who doesn’t know someone who is upside down in a house or whose parents can’t sell the home to move to Florida or … know someone who can’t sell their house and move to another community to take a new job opportunity.”
- Researchers are reporting how young people have come to think differently about home ownership around the world. An April survey conducted by the Mortgage and Finance Association of Australia indicated that more than half of Gen Y Australians saw themselves as lifelong renters. In the U.S., a February 2010 study by Pew Research Center showed only 20% of Millennials (first-time buyer age range) think home ownership is one of the most important things in their lives, ranking fourth behind higher priorities like being a good parent or helping others.
- In 2009, pollster John Zogby, speaking at the Pacific Coast Builders Conference (PCBC) told attendees that he sees a future where spiritual goals, not material ones (like owning a home) will be more important. He argued that Gen Y’s mobility, global interconnectedness and altruistic tendencies toward sacrifice (he cited recycling) will “create new forms of shared homeownership to accommodate their mobile lifestyle.”
Shared home ownership is otherwise known as renting.
Many voices are telling a new tale of the American Dream. This isn’t the first time this has happened, nor does it mean it will ultimately be adopted by consumers. But when 90% of home purchases are underwritten by government dollars, with government strings attached, it’s not hard to imagine how future living preferences could be influenced.
What about the housing industry’s story telling? The “voice” of real estate, the National Association of REALTORS, seems stuck like a broken record. Most of their monthly tales revolve around the “Pending Sales Index,” not the most exciting news to be told. For a while they ran with the “great time to buy,” storyline, which died along with the government tax credits. Few REALTORS know that NAR has been running a “What Matters Most” campaign, reminding consumers that home ownership remains central to communities. Not surprising, since you can hardly find it on YouTube. There are plenty of clips about the future of MLS, though. Even their recent press releases are a veritable snoozefest of mundania like dental and flood insurance.
Which leaves us with the million-plus real estate professionals in the small towns and big cities of America. They are the story tellers on the front lines of the home ownership battle. It’s up to them to revive and support the American Dream, to keep it from falling into disrepair, or worse, becoming a myth. Local agents and national brokers must tell this story, one buyer and one seller at a time.
Only they can put the story of the American Dream back on track.
Real estate professionals are the best antidote to the anti-housing sentiment amongst today’s intelligentsia. The press can be counted on to mindlessly repeat the story-line of politicians and bureaucrats. It’s the neighborhood real estate agent who has the best opportunity to tell a different story to consumers. And it’s their story, the one in which everyone lives happily ever after.
In their own homes.
It’s a story worth telling.