Don't Tell My Husband ... Homeownership Is Dead
April 8, 2009
My husband cannot stand renting. He grew up in the Basque Country in the north of Spain, a country where people have been known to live with their parents until age 30. This isnt necessarily because they like their parents, though many do. They stay at home because it allows them to save money. Then, when they marry, they pull their piggybanks together and hope to have enough between the two of them for a significant down payment on a house.
Renting is a relatively new phenomenon in Spain, driven mostly by young people heading off to the big city after college to find work. My husband did this, and like many others landed in Madrid, where we later met and spent two years living together in a tiny, six-floor walk up. Needless to say, our rent was astonishingly cheap. In New York, not so much. And each month, when we send off that check, he cant help but feel it equivalent to flushing money down the toilet.
Me, Ive always considered homeownership a bit overrateda burden of responsibility that limits your freedom and eats away at your pocketbook your whole adult life, just so that, when youre old and finally have the thing paid in full, they can come along and tell you youd be better off in an assisted-living center.
And since I enjoy nothing quite so much as being proven right, I was ecstatic to read an article in a recent issue of The Atlantic magazine called How the Crash Will Reshape America, which makes, among other points, the compelling argument that homeownership in our new creative post-industrial economy isnt necessarily a good thing.
The writer, Richard Florida, argues that for our economy to stay vital we need to charge headstrong into a model of economic innovation, people working together in creative ways to solve problems and create new products and technology. And this model works best in densely populated areas; places like New York City and the Silicon Valley among others will prosper under this new economic order, according to Florida.
The problem is that the housing bubble encouraged massive unsustainable growth in areas where land was cheap and the real-estate economy dominant. It created low-density sprawl and a workforce too often stuck in one place, the wrong place, where they are anchored by houses they cant profitably sell. And when their suburbs come tumbling down, as many have, they are stuck there, unable to move to where the new jobs are destined to be created.
To avoid this problem in the future, Florida says, we need to remove homeownership from its long-privileged place at the center of the U.S. economy. If anything government policy should reward renting, not buying. He believes that incentives like tax breaks and artificially low interest rates distort demand, and fabricated demand for bigger houses skews residential patterns, leading to the excessive suburban growth we can no longer sustain.
Really interesting stuff, but my problem with Floridas argument is that it doesnt work for me. It makes perfect sense to me that, in the new economy, many people will be better off if they remain flexible and mobile, people in Phoenix, say, or Tampa or Cincinnati or Detroit. In essence, Florida is saying dont buy houses in those places.
But I live in one of the creative centers he talks about, New York City. And, according to Floridas logic, buying in New York City probably isnt a bad idea, is it? Especially if we rent it out later, to all the hoards of young innovators moving here from across the rest of the county.
All of which means, when it comes to homeownership, at least in our case my husband is still kind of right. I hate that.