Reports are out today showing that the housing slump continues big time. This may be one of the best things that could happen to American cities.
Today 66% of American households own their own homes, down from 69% just six years ago. And it doesn't look like things will turn around anytime soon. An index of housing deals expected to close in the next two months was predicted to be down by 1%; instead today's figure showed that short step to be more like a cliff, with the number of pending deals down a whopping 11%. You can read about it in The New York Times.
Some analysts predict that we're headed for home ownership levels of the early 1960s, when barely six out of ten families owned the old homestead. This news is greeted with alarm and I understand why. Home building is a huge chunk of the American economy. But for who?
Fewer transactions are bad news for realtors and title companies and mortgage insurance companies and related industries. I have good friends in all those fields and I don't wish them ill. But people still have to live somewhere and if the skilled craftspeople who would otherwise be building single family homes are now building multi-family rental properties, well, the work is still pretty much the same.
And what does this really mean for our overall economy and for city life in general? You know what the two top countries for home ownership are? Ireland (83%) and Italy (73%), two countries teetering on economic meltdown. And the European Union nation that's most under pressure to bail them out is Germany, where the home ownership rate is 43%.
Maybe that shouldn't be surprising. A recent study (PDF) by the Federal Reserve showed that investing in a home beat out other strategies no more than half the time. So if the idea is that home ownership predicts a strong economy, those numbers at least don't support the case. You can see the entire list of international home ownership rates here.
And here's a really interesting question: What does a city of renters feel like compared to a city of owners? Paris' home ownership rate is 44%. Maybe a city of renters channels more civic energy into the public realm. The street is your front yard, so you treat it like that.
In addition, multi-family construction means more density, which leads to more people enjoying the scene on the street, which leads to more cafes and such and the casual mixing it up that makes a city a vibrant place. More density also means less sprawl and greater opportunities for transit options.
Because rental spaces tend to push us out into public spaces while owner-occupied homes tend to tie us down to the painting and the window washing and grass cutting and the endless tasks of responsible ownership, it could just be that a city of renters makes for a more lively place.
Hypocrite Alert: I write this from the front porch of a house I love. At this point in my life I don't want to rent, but I also know there will come a time when Dianne and I will make the choice to move into some kind of multi-family arrangement.
In fact, this will happen in an avalanche as 77 million of us in the Baby Boom generation start to get on in years. Demographics alone may dictate that American home ownership rates will never flirt with 70% again. And for cities, that's good news.