Home Ownership & The American Dream
January 19, 2009
Part four: Costs and Benefits to Society.
Logic dictates that encouraging homeownership should be a public policy goal because it positively impacts society. Someone who owns a home is theoretically more inclined to care about the home and the neighborhood. In order to maintain resale value, they have incentives to keep the home properly maintained and to be active in their community; they have incentives to keep crime low and support local public schools. This is, regardless of how happy homeownership makes people feel, why government has subsidized homeownership for decades. Is society better off as a result? Stephen Slivinski of the Richmond Fed questions these assumptions:
Subsidizing homeownernship seems like a noble goal, but as long as it is accompanied by rampant sprawl, the benefits are going to be offset. The is a dilemma, particularly for progressives and liberals, who understand that sprawl has led to social and economic segregation, environmental devastation, and pushed America's cities as close to collapse as they could come, but who have believed for a long time that homeownership was a goal intended to help those who needed it the most.
See Also:
Part One: How Did We Get Here?
Part Two: How Desirable is Home Ownership?
Part Three: What the Academic Research Shows
Logic dictates that encouraging homeownership should be a public policy goal because it positively impacts society. Someone who owns a home is theoretically more inclined to care about the home and the neighborhood. In order to maintain resale value, they have incentives to keep the home properly maintained and to be active in their community; they have incentives to keep crime low and support local public schools. This is, regardless of how happy homeownership makes people feel, why government has subsidized homeownership for decades. Is society better off as a result? Stephen Slivinski of the Richmond Fed questions these assumptions:
To understand how the ranks of homeowners grew, we need to understand the spread of homeownership in 20th century America. It is largely a tale of how the urban and economic landscape changed and the rise of suburbanization… Harvard University economist Edward Glaeser suggests this illustrates what is now practically an Iron Law of housing economics: People who live in urban areas are usually renters, and those who live in suburbs are usually owners. “If you’re trying to explain the differences in homeownership between cities in the United States, the physical structure of the homes is the overwhelming variable,” says Glaeser. Or, to put it another way, the people who live in detached single-family homes tend to own them — and most of those sorts of housing units are concentrated in suburban areas… By the 1960s, suburbanization and the policies that accompanied its growth had changed American politics and culture. Many presidential speeches since then have included some kind of nod to the perceived importance of owning a home and have been often accompanied by a variety of new policies. By the late 20th century, owning a home was equated in the popular imagination as an important life goal. Today, the consequences of these trends are not something most people would like to ponder over their burgers at a suburban backyard cookout. But the consensus among economists now is that the policies geared to encouraging people to own homes have had very real economic costs.Controlling for the right variables, I think the original logic probably holds true. For instance, in a neighborhood with 500 households, if every household switched from renting from an absentee landlord to owning, that particular neighborhood would probably be better off. Unfortunately, as Slivinski notes, that isn't how it works. Since homeownership subsidies have been, more or less, sprawl subsidies, people did not switch from renting to owning property within their existing neighborhood, instead they left the old neighborhood to buy a home elsewhere. The costs of sprawl have been documented in many places by many organizations and should be weighed against the supposed benefits to society that homeownership offers.
Subsidizing homeownernship seems like a noble goal, but as long as it is accompanied by rampant sprawl, the benefits are going to be offset. The is a dilemma, particularly for progressives and liberals, who understand that sprawl has led to social and economic segregation, environmental devastation, and pushed America's cities as close to collapse as they could come, but who have believed for a long time that homeownership was a goal intended to help those who needed it the most.
See Also:
Part One: How Did We Get Here?
Part Two: How Desirable is Home Ownership?
Part Three: What the Academic Research Shows
I don't disagree with your basic point that suburban development and the increased homeownership that goes along with it have costs that that we don't typically account for. However....
Since homeownership subsidies have been, more or less, sprawl subsidies, people did not switch from renting to owning property within their existing neighborhood, instead they left the old neighborhood to buy a home elsewhere.
That's a very broad statement. Was there ever actually any time in the past when a majority of Americans lived in big cities, and that edenic time was disrupted by postwar suburbanization? I mean, we have this mental picture of people in the 1950s leaving their cramped city apartments and moving to new single family homes in Levittown, but what percentage of people in the country every actually did that? I know, for instance, that there are a lot more people in the Washington DC metropolitan area now than there were in 1950, and the vast majority of that growth has been suburban, but only part of that was people actually leaving the city (including my parents!). Now, Cleveland is a different story, of course, because here we really do have sprawl without growth, but this isn't true for many places.
If you go back in time to before, say, 1920, I suspect you'll find that a lot more people lived in small towns and in rural areas, and those places seem to be depopulating just like the city centers were until recently. Maybe those small town/rural people moved directly to suburbia rather than ever living in the city itself. Maybe the total number of people migrating in this particular way is even greater than the number that ever moved from the city to the suburbs -- I have no idea, personally, but it certainly seems possible.
Again, I'm not disputing your basic point, but the whole "people move from the city to suburbia" concept seems too simplistic to me.