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Thread: Rise of rental housing

  1. #1
    Cyburbian
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    Rise of rental housing

    Planners: The next APA Policy Breakfast is on the topic of the rise of rental housing. Much discussion is about GEN Y not seeking homeownership as it was common for the Baby Boomers (their parents). Many have said they are to living a flexible lifestyle and do not see homeownership as a key LIFE PATH. GEN Y has saw the GEN X and Baby Boomers (and some of their peers) purchase homes during the height of the market only to be saddled with an empty asset. They seek out unique, diverse and very interesting neighborhoods. It is more a matter of urban design, than tenancy in a building (e.g. they don't care if a national real estate developer holds the mortgage).

    1. What is everyone's thoughts?
    2. I personally do not think multifamily is the savior particularly when GEN Y reaches the 35-40 age group. What about a rental town home community? I have only seen one examples in Philadelphia.
    3. I cannot find a stat -- but I think back to the pre-WWII (1940s) when homeownership levels were 40-50%; rather than near 65% today

    Look forward to the discussion!!

    ===

    Featured Speaker

    Matthew Yglesias
    Slate's business and economics correspondent, writer of the Moneybox blog & author of the newly published The Rent is Too Damn High

    Please join the American Planning Association for a policy breakfast discussion on the impact of the rise of rental and multifamily housing on housing and community policy and economics. Homeownership and mortgage policies were at the center of the housing crisis that plunged the nation into the deepest recession since the Great Depression. Increasingly, it appears that recovery in the housing market will be driven by renters and multifamily housing.

    Both demographic and real estate trends point to the vital role of rental housing in building strong communities and the overall economy.

    · Nationwide apartment vacancy rates are at a decade low while average rents continue to rise to the highest level in more than four years.

    · Housing construction has been led by multifamily housing starts with single family construction continuing to decline. In February, multifamily starts grew 21.1% while single family starts declined nearly 10%. Multifamily housing construction is up 85.4% from a year ago and has fully recovered to pre-recession levels.

    · Morgan Stanley estimates that converting foreclosed properties to rental properties would generate 1.8 million jobs.

    · Three large population segments likely to dominate the housing market: Gen Y, retiring baby boomers, and homeowners displaced during the recession show strong preferences for multifamily and rental housing.

    What are the implications of this shift for policymakers and planners? How should housing policy — from Washington to local zoning boards — change in response to the demand for rental and multifamily housing? How should housing and neighborhood policy respond to the challenge of foreclosed properties? How should housing finance policy and institutions change?

  2. #2
    Cyburbian
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    As a Millennial I have zero interest in purchasing a house. I just view them as an anchor that reduces the amount of flexibility I have in almost every major life decision I'd make. The idea of having a house potentially holding me back from something I want to do is simply unappealing. Be it getting married, having kids, or finding a new job; having a house can significantly influence all those. I just don't think the housing market will allow for the flexibility it once did.

    As for the type of housing stock that appeals to me. I have zero interest in yards since I view them as an inefficient use of space that I have no desire to maintain. I definitely don't mind multifamily and most of the existing stock out there I don't dislike. New urbanist stuff is cool and all but I have no problems sticking with something more traditional.

    I think a shift to higher density and multifamily would be a reasonable response to changing demographics though. Younger people aren't as interested in single family housing while older people will be increasingly unlikely to be able to maintain them.

  3. #3
    Cyburbian MacheteJames's avatar
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    I'd be careful not to conflate homeownership with detached single family homes and multifamily with rental housing. Here's why:

    I'm an early Gen Y. I'm not particularly interested in owning a detached dwelling; however, homeownership is something that does appeal to me as my experience has been that ownership housing results in a better quality of neighbor than rental housing. By 'better quality', I mean less transience, better upkeep, and an enhanced sense of community versus equivalent rental housing. This is purely anecdotal on my part. Here in NY, housing cooperatives are a very common ownership structure - you get the benefits of better neighbors and the homeownership tax writeoff while avoiding the hassles that go with living in a detached single family home. This type of housing arrangement does not preclude the option of a sublease by the owner of the unit, effectively allowing rental housing within the co-op building.

    As for implications of this shift? I work in a first-ring railroad suburb, and in this community, the norm in the SFH neighborhoods is still very much against the idea of renters as neighbors. If we are moving toward mass amounts of rental housing (of all types) in place of ownership, then there will definitely be a clash of values and norms along with a ton of hand wringing that will play itself out over the years as longstanding Boomers and Gen Xers who own their homes come to grips with an increasing number of Gen Y renters as their neighbors. Many a planning board meeting has been filled with the lamentation of homeowners over proposed rental multifamily development and I'd expect a lot more to come.

  4. #4
    Cyburbian ColoGI's avatar
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    Hey Jim:

    In my view our new normal economy means ever-more people chasing around temporary jobs. Why be saddled with a house, especially when they aren't a guaranteed investment any more? Lots of investors snapping up houses in anticipation of this idea.

    Personally I always rented before, and now that I own I really don't care one way or the other - but if we had to move because one of us got a great job, we'd be stuck with this thing and likely have to rent it and hire someone to manage it. The only good thing is that I'm a gardener and I can fart around in my own yard, rather than driving to an allotment/urban garden plot. If I were to consume another dwelling unit, I'd want to build my own on at least 1/2 acre so I can grow more food and have more plants, although I'm likely in a minority of planners.

    To expand on Machete James' point about ownership, we are out in a McSuburb with neighbors who are mostly people who vote for the red candidate or g-- forbid a teapurty guy. We hardly see anyone outside doing anything, and their yards are boring expanses of turf and rock where a lawn service comes out, sprays chemicals, and kills their trees with weed-whackers and no one knows any better. And many neighborhoods are like this one.
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  5. #5
    Cyburbian DetroitPlanner's avatar
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    This probably also is dependant upon where you live in much of the Metro Detroit area, owning a home costs about half of what it costs to rent. It is correct though that it ties you down though. One of my biggest albatrosses is my FLW-style cabin in Northern Michigan. At one time it seemed to be a wise investment, then the state lost about a million jobs and suddenly people were no longer interested in second homes! After all, if you're having a hard time holding onto your primary home, a second one is not even in the picture.
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  6. #6
    Cyburbian
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    Thanks for the reply. I agree in not aligning rental with the multi-family product type as well. I have seen a lot of articles about major companies buying foreclosed properties; pulling them together and then renting as one portfolio.

    I'm surprised we have not yet heard about planners personally "chasing after the american dream"? Any thoughts from a GEN Xer?

    p.s. agree that each metro area is different. buying in Iowa may make better sense than in NYC. I'm speaking from the urban areas.

  7. #7
    Cyburbian Cardinal's avatar
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    Remember that until 2007 the most important investment made by the typical household was to purchase a home, and they could expect a very decent annual return on that investment. The dramatic drop in home values has been only one issue impacting rental and ownership decisions.

    1) Generation Y and millenials are dealing with high debt loads and lack of employment. Over half of recent college grads are still unemployed or severely underemployed, while carrying substantial college debt that will prevent them from accumulating the money and affording the monthly mortgage payments for a house.

    2) Generation X has been stung by unemployment and the loss of home equity. We bought our homes and have been making payments for years with the expectation of selling and pocketing consderable equity. Now a very high percentage of Gen X finds itself underwater in mortgages and unable to sell without incurring catastrophic losses that make it impossible for them to buy new homes. Adding to their problems, job losses for Gen X workers will have long-lasting implications for their buying power, savings, and retirement, as they often re-enter the work force with a substantially lower income than they previously received.

    Generation X and younger share a concern about mobility. Homes are not moving quickly and sales usually translate to financial losses. Newly working younger people and older people who have taken lower-level jobs do not intend to remain in these positions when something else comes along. Even those who weathered the storm without becoming unemployed are concerned about job security, and may be hesitant to buy a home that ties them down to one place.

    3) Boomers were more likely to see the effects of the recession in their home equity and in their retirement savings. Because they have been paying off their mortgage for a longer time they may not be upside down, but have still lost value they counted on to purchase their retirement home. Along with older generations, they may still move from the four bedroom suburban home they may no longer want to maintain, but may not buy the retirement home they planned.

    Summing it up, high debt, financial losses, unemployment and underemployment, mobility, lack of job security. Rentals outpace ownership.
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  8. #8
    Cyburbian wahday's avatar
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    Gen Xer here. This is definitely a complex issue and I feel my personal views are informed by 1) where I am in my personal life (ie. married with two kids) 2) financial realities (uncertain work future, wage stagnation) and 3) values and views about homeownership inherited from my parents.

    1) As a parent, home stability and being rooted in a particular location have a lot of value. As education becomes increasingly complex and challenging, finding a good situation and investing in that place carries a lot of weight. This makes me want to own a home, to have that local investment in place and build relationships within a neighborhood. Perhaps one could rent, but ownership within the neighborhood does promote a level of investment, upkeep and community buy-in that you do not see with rentals.
    2) As a worker in my mid-40’s I had hoped to be more financially stable, further up the pay scale and on more of an identifiable career trajectory by now. But the economy has had different ideas. Even before the 2008 crisis, Gen Xers felt the sting of being in the Boomers’ shadows and enjoyed a much lower out-of-college starting salary as well as reduced advancement rates and accompanying pay than those who came before. But we (or I should say “I”) kept hearing and believing that this would change and we would get ours. But then the crap really hit the fan and now I really don’t know what to expect from the future. This element makes me question home ownership and feel that renting would make it easier to move in pursuit of a job or career advancement if circumstances required it.
    3) My parents are a good bit older (my brother is 54) so they really came out of a generation where homeownership was both the thing to strive for and much more achievable as a percentage of salary. I grew up on a one acre property in a 5 bedroom home built in 1917 in a Philly suburb. In 1968 they bought this amazing house for a mere $35,000. I kid you not. Yes, salaries were different and inflation needs to be factored in, but even with all of that, housing (and homeownership in particular) constituted a much smaller percentage of salaries than today. In my father’s day, the rule of thumb was “never buy a home that costs more than one year’s gross salary.” Today, that’s a joke. In my market, there are no homes in that range. I probably couldn’t even buy undeveloped land for a year’s salary.

    So, I do own a home. I value the element of being in a neighborhood with other owners (and a good deal of renters where the property owners live nearby and are invested in the community) But, we are considering a move within the city in the next 3 years and the prospect of selling, of whether we will get what we paid for it (bought at the top of the market), of the work we need to put into it to prepare for sale, and if it will even sell in a timely fashion is really weighing on us. It makes me wish we were renting. And we may end up renting when we move.

    If we move and rent, we would not be looking for an apartment but rather a house with some yard. We garden, have two kids that need some space to run around, have a dog and a cat and a rabbit and I will admit, I value having a little bit of space around me. But I am definitely questioning owning as a way to achieve this. There are plenty of rental opportunities that can result in the same size of home and amenities and it makes you a little more mobile if necessary. The downside in our local economy is that the monthly rent is comparable, if not a little higher than, what a mortgage on these same size and location of homes would be. The prospect of paying MORE or even the same and getting no equity is a little troubling.

    No definitive answer to your questions, but just some of the thoughts that are rattling around for us at this time. Its definitely something we think about a lot as we plan for the future.
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  9. #9
    Cyburbian stroskey's avatar
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    As a millennial I have mixed thoughts on this. My wife and I would love to travel and experience new things but we have two dogs and both work full time.

    We both got jobs in our respective fields in the same city with a decent cost-of-living right after college. Rentals in our town are geared towards low-income residents. Because housing prices are so inexpensive compared to other areas any decent apartment would cost the same as buying the same house. I wish I would have rented because we bought a SF house right after college in 2008 and it has since lost about 10%. I would have not lost the six thousand per year in value if we would have rented. But, we then purchased a larger second SF home at a discounted price. I understand the desire or need to move but when you have the money, time, and job security to buy a house that's the route we choose to go. There are some new townhouses but they are at the edge of the city where there is no practical benefit, unlike if they were downtown on Main Street or something. Where we live the choices are either SF home or crappy apartment. There are virtually no middle-income renters and the rental housing stock certainly shows that.
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  10. #10
    Cyburbian Linda_D's avatar
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    Quote Originally posted by stroskey View post
    As a millennial I have mixed thoughts on this. My wife and I would love to travel and experience new things but we have two dogs and both work full time.

    We both got jobs in our respective fields in the same city with a decent cost-of-living right after college. Rentals in our town are geared towards low-income residents. Because housing prices are so inexpensive compared to other areas any decent apartment would cost the same as buying the same house. I wish I would have rented because we bought a SF house right after college in 2008 and it has since lost about 10%. I would have not lost the six thousand per year in value if we would have rented. But, we then purchased a larger second SF home at a discounted price. I understand the desire or need to move but when you have the money, time, and job security to buy a house that's the route we choose to go. There are some new townhouses but they are at the edge of the city where there is no practical benefit, unlike if they were downtown on Main Street or something. Where we live the choices are either SF home or crappy apartment. There are virtually no middle-income renters and the rental housing stock certainly shows that.
    Outside of large urban metros, I think this is the rule rather than the exception. In my small city, apartment rentals are exorbitant for the quality in comparison to the price of SF homes. When I bought my house in 2003, my payment, including mortgage, insurance, and taxes was only about $50 more a month than my rent. It hasn't changed much.
    If a free society cannot help the many who are poor, it cannot save the few who are rich. -- John F. Kennedy, January 20, 1961

  11. #11
    Cyburbian
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    From my experience it's the newer apartments that are nicer. As they get older, the quality of the maintenance and tenants often decline. This is problematic when you're in an older area that hasn't seen much new construction.

    What I find somewhat bizarre around here is the rent on the new apartments is roughly the same as the shady ones. For me, it's a no brainer to seek out the newer places even if I have to drive a bit further.

  12. #12
    Cyburbian
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    At the end of the day, this comes down in large part to what people can afford. With GSE subsidies crippled (they should be eliminated IMO), with home prices still inflated relative to affordability despite having plunged 35% already, with the labor force participation rate at basically the same level it was in the 1950s (when most women weren't working), with unemployment among Gen Yers at some astronomical depression-era level, with the real income of households whose head is under 30 years old having fallen by a specular 23% from its peak in 1973 (yes, if you are in your 20s, you are making one quarter less than what your cohort made in 1973.. if you're fortunate enough to have a job at all), with fuel costs at record levels, and with healthcare costs out of control, do you wonder why more people are renting? I don't think this should be regarded as some type of big mystery over subtly changing cultural preferences. People will buy homes (whether SFDs or condos) when and if it is in their economic interest to do so. At the present time in history, unless you're wealthy and over 45, it isn't.

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    Cyburbian Linda_D's avatar
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    Quote Originally posted by Cismontane View post
    At the end of the day, this comes down in large part to what people can afford. With GSE subsidies crippled (they should be eliminated IMO), with home prices still inflated relative to affordability despite having plunged 35% already, with the labor force participation rate at basically the same level it was in the 1950s (when most women weren't working), with unemployment among Gen Yers at some astronomical depression-era level, with the real income of households whose head is under 30 years old having fallen by a specular 23% from its peak in 1973 (yes, if you are in your 20s, you are making one quarter less than what your cohort made in 1973.. if you're fortunate enough to have a job at all), with fuel costs at record levels, and with healthcare costs out of control, do you wonder why more people are renting? I don't think this should be regarded as some type of big mystery over subtly changing cultural preferences. People will buy homes (whether SFDs or condos) when and if it is in their economic interest to do so. At the present time in history, unless you're wealthy and over 45, it isn't.
    I think that's somewhat true. I think what's true is that owning a home is no longer viewed as a foolproof investment vehicle. I think this means that people will buy homes primarily to live in rather than as a means to an investment end.

    The reality is that the technical job market remains strong even for new grads. Engineers, accountants, nurses, computer programmers, etc are NOT having problems finding jobs, even in backwaters like SW NYS and NW PA. The grads who are having problems finding suitable employment tend to have more general degrees. As in previous recent recessions, a lot of the job losses are jobs that are simply being replaced by automation. When was the last time you called a business and actually got a person rather than an answering system? Receptionists, admin assistants, office managers, etc are on the road to extinction like switchboard operators and keypunchers.
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  14. #14
    Cyburbian MacheteJames's avatar
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    Quote Originally posted by Linda_D View post

    The reality is that the technical job market remains strong even for new grads. Engineers, accountants, nurses, computer programmers, etc are NOT having problems finding jobs, even in backwaters like SW NYS and NW PA. T.
    I don't buy into this meme. The technical job market is not strong by any historical standard. It may be strongER than professions such as planning (which has been savagely wounded in this recession) but I wouldn't term it healthy. I mean this with all due respect, but aren't you retired? For those of us with decades to go in the trenches of the working world, I can tell you that many of the friends that I grew up with and went to college with - who work in the fields you mentioned - are still struggling with layoffs and lack of opportunities. A buddy of mine who is an accountant at a big name firm in the city lost his job recently and is living on savings.

    That said, I do agree that the lure of homeownership remains, even if the means to achieve it have been made ever more difficult. Once (if?) we ever get a real recovery, I think preferences will shift accordingly. As I said before, homeownership does not have to mean detched single family home, and indeed, in the built out area where I live and work, there is no way for it to mean that.

  15. #15
    Cyburbian mgk920's avatar
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    Is my sense that house ownership is reverting more to being the American 'Dream' than the American 'Right', as it struck me as being over the past several decades, correct?

    Also, my sense is that a century ago, most people rented (and renting was not something that others looked down their noses at) while saving up to be able to buy a house entirely at market prices and with no government subsidies of any kind.

    Mike

  16. #16
    Cyburbian
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    Quote Originally posted by Linda_D;630846T
    he reality is that the technical job market remains strong even for new grads. Engineers, accountants, nurses, computer programmers, etc are NOT having problems finding jobs, even in backwaters like SW NYS and NW PA..
    Relatively strong.. Not strong, and accountants aren't doing too well where I am., worse than planners, in fact. I think I know more out of work accountants than any other profession.. Well, aside from landscape architects, architects and lawyers, that is.

    Unfortunately, when the question is housing, it comes down to numbers and the economy will never support as many technical jobs such as software development and engineering and nursing as will be needed to replace those other types of jobs not being created, even if our schools increase the number of programmers, nurses and engineers they're educating. Furthermore, if you want to sustain 70% homeownership, as has been the case in past decades, you need non-college-educated types buying more than HALF of those homes. Remember, among the young, only 40% will get BAs or AAs or higher, and not all at once. If, as Linda says, the bottom is falling out for those without college degrees, then the homeownership rate will fall a lot further. Sub-40% could be a long term target... Unless regulatory reforms allow prices to drop in the coastal and main urban markets (where jobs are) to rational levels.

    My dad's a developer. He was exaggerating a bit, but only a bit, when he told me some months ago, that the only young people who will be buying homes at all, if things don't change, in our more expensive coastal markets, are those who can rely on inheritance or their parents... Trading off existing equity and past savings. Housing in the US remains in structural crisis and will for some time.

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    Cyburbian ColoGI's avatar
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    Quote Originally posted by MacheteJames View post
    I don't buy into this meme. The technical job market is not strong by any historical standard. It may be strongER than professions such as planning (which has been savagely wounded in this recession) but I wouldn't term it healthy.
    Meme is the correct word. It is the meme of a particular ideology, but I don't see it actually manifested in reality. Nursing maybe, but my mom retired as a nurse and I can tell you the nurses I know don't think their profession is going in a good direction, even though this country is fat and unhealthy and aging - and that means lots of nursing demand.

    Quote Originally posted by Cismontane View post
    ... that the only young people who will be buying homes at all, if things don't change, in our more expensive coastal markets, are those who can rely on inheritance or their parents... Trading off existing equity and past savings. Housing in the US remains in structural crisis and will for some time.
    Yup, this country cannot support the brief rate of homeownership that we think has always been the norm. Especially if things continue as they are and our wealth continues to be transferred upward.
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  18. #18
    Cyburbian btrage's avatar
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    Quote Originally posted by Cismontane View post
    My dad's a developer. He was exaggerating a bit, but only a bit, when he told me some months ago, that the only young people who will be buying homes at all, if things don't change, in our more expensive coastal markets, are those who can rely on inheritance or their parents... Trading off existing equity and past savings. Housing in the US remains in structural crisis and will for some time.
    When I watch the homebuying shows on TV, I've always wondered where the couples come up with their 100K down payment, working as a teacher and an engineer.
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  19. #19
    Cyburbian
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    Quote Originally posted by jamesrouse View post
    Thanks for the reply. I agree in not aligning rental with the multi-family product type as well. I have seen a lot of articles about major companies buying foreclosed properties; pulling them together and then renting as one portfolio.
    In theory, in the absence of regulatory (whether zoning or subsidy) distortions, there should be no arbitrage between rentals and ownership units, with capitalized rental yields equaling sale prices for homes, adjusting for taxes, fees, and the depreciation and mortgage tax deductions, respectively. If this is not the case, somebody would have a money printing machine. Therefore, the product type (single, multi-family) should, ideally, have nothing to do with tenure and vice versa. However, as a practical matter, there are regulatory distortions. It may be easier to get tax-payer subsidized financing from the GSEs for construction of single family homes to be sold as opposed to homes to rented, while it may be easier to get affordable housing credits for construction of multi-family homes to be rented as opposed to sold. Secondly, zoning for multi-family tends to favor smaller unit typologies and, in some cases, there just isn't enough zoning for multi-family. Zoning for multi-family may be designed to coincide with zoning for affordable housing, zoning for multi-family may be more prevelant in less desirable neighborhoods or locations, etc, etc. Thirdly, there's the huge regulatory distortion presented by the mortgage tax deduction. So, as a practical matter, there are some tendancies that suggest an alignment with rental with multi-family, but these are, I would argue, regulatory artifacts, for the most part. They would (or should) disappear if one simply took away the causative anti-market regulatory distortions. The result would probably be a better balancing of product type with demand.

    This being said, people, such as young people, with higher debt burdens, more unemployment, areas of high population growth, etc, would tend to require smaller units (assuming no arbitrage across tenure-types, they still would need smaller units) irrespective of whether they are intending to rent or buy. In many areas, smaller units tend to be more multi-family, these days, (or at least attached product) all other factors being equal. This is why I believe the future lies with multi-family and attached single family considerations: increasing population density in employment growth areas would tend to cause land residual inflation, coupled with the debt and employment challenges faced by younger families, would combine to favor high density. Similarly, the latter set of considerations (high debt and employment challenges) would also tend to favor rentals, due to the higher hurdle rates for obtaining financing and for raising sufficient capital for the down-payment. Assuming these trends coincide geographically (actually, a pretty big assumption and far from certain), then the future is probably MORE rental AND MORE multi-family, but one would not be determinative of the other (again, in the absence of regulatory distortions). .... in which case you might observe some type of convergence - smaller units/more multi-family and more renting.

    There are some reasons why this convergence may not happen. First of all, higher debt burdens and more unemployment, combined with decreasing credit capacity, has led to another phenomenon - mobility reduction. With mobility reduction - people forced to stay put because they cannot obtain affordable housing - whether by renting or buying - at the location of new or prospective employment - would tend to mitigate against new construction altogether. This means that the existing regulatory artifacts - that may favor single family homes - will remain more persistent, in the face of reduced new construction and liquidity.

    In any event, my guess is that unit sizes for new construction will continue to fall and multi-family will become more commonplace, irrespective of whether or not this convergence happens and irrespective of whether units are bought or rented. Arguably, mcmansions, whether owned or rented, are only possible due to massive regulatory distortions that cannot be sustained. The issue of reduced mobility may hasten or speed up this trend, depending on the geography and the details of the micro-economy (namely, what the owners of a given area or cluster do for a living and which sector they actually participate in).
    Last edited by Cismontane; 07 May 2012 at 3:39 PM.

  20. #20
    Cyburbian stroskey's avatar
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    Quote Originally posted by btrage View post
    When I watch the homebuying shows on TV, I've always wondered where the couples come up with their 100K down payment, working as a teacher and an engineer.
    I think we've had this discussion before? There are a lot of wealthy parents out there. Three of the four houses that sold on my block in the past year were purchased outright by parents for their children. Talk about an advantage!
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  21. #21
    Cyburbian wahday's avatar
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    Quote Originally posted by mgk920 View post
    Is my sense that house ownership is reverting more to being the American 'Dream' than the American 'Right', as it struck me as being over the past several decades, correct?

    Also, my sense is that a century ago, most people rented (and renting was not something that others looked down their noses at) while saving up to be able to buy a house entirely at market prices and with no government subsidies of any kind.

    Mike
    Ask and ye shall receive. Here is a link to homeownership rates data in ten year increments from 1900 to 2000. Its pretty interesting and varied. In my state, the rate in 2000 is only 2 percentage points higher than in 1900. Other states have seen a more dramatic change.

    Throwing aside the issue of people feeling its a "right" instead of a "dream," the economic reality is that housing costs a much higher percentage of salaries than it did at least going back to the 1940s. That applies to both rental and ownership with the main difference being the ability to plop down cash and access financing for ownership. But in my part of town, a comparable rental HOME is the same or even higher than what I pay monthly for my mortgage. An apartment or condo rental would probably be cheaper or similar in monthly costs, but to get notably cheaper, I have to look outside the area easily accessible to my work and so would have to add more travel costs to my true housing costs.
    The purpose of life is a life of purpose

  22. #22
    Cyburbian
    Registered
    Oct 2007
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    San Diego, CA
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    754
    Quote Originally posted by stroskey View post
    I think we've had this discussion before? There are a lot of wealthy parents out there. Three of the four houses that sold on my block in the past year were purchased outright by parents for their children. Talk about an advantage!
    The problem is this trend can't go on for ever. Yes, parents still have a lot of built up equity that isn't completely levered and thus can be used to lever up further with and buy stuff for their kids (which they can do, since the 'rents' credit is start relatively good), but that stuff is mostly still radically overpriced.. so they're just feeding the same mess, albeit in a somewhat healthier way than more subprime mortgages. Meanwhile, the kids will not have the capability to futher leverage their parents' equity (like the parents are doing now), so this chain of transferred homeownership ends with them, slowly puttering out as the leveraging capacity and accumulated equity of the Great Society and Boomer generations continues to be depleted. It's just kind of just postponing the inevitable. And, yes, I blame the members of those two generations for getting us into this mess to begin with. I'm an Xer, so I'm still sort of OK. The people who come after me, not so much, and less so for each generation going forward.

    What's needed is a big, across-the-board, national-level price-resetting.. as painful as that will be. Since that won't happen - because our politicians would never let it happen.. this mess is just going to go on and on until the next bubble bursts. My fear is that property-bubble-induced recessions - like the one we're just now started to come out of - will start occuring with increased frequency going forward, without enough time between them for any real growth.. each one making people just a little poorer and more miserable than the last. This cycle of progressive impoverishment will continue until our politicians start to face reality.. which they so far have shown zero interest, will and cognitive capacity in doing.

  23. #23
    Cyburbian mgk920's avatar
    Registered
    Mar 2004
    Location
    Appleton, Wisconsin
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    Quote Originally posted by wahday View post
    Ask and ye shall receive. Here is a link to homeownership rates data in ten year increments from 1900 to 2000. Its pretty interesting and varied. In my state, the rate in 2000 is only 2 percentage points higher than in 1900. Other states have seen a more dramatic change.

    Throwing aside the issue of people feeling its a "right" instead of a "dream," the economic reality is that housing costs a much higher percentage of salaries than it did at least going back to the 1940s. That applies to both rental and ownership with the main difference being the ability to plop down cash and access financing for ownership. But in my part of town, a comparable rental HOME is the same or even higher than what I pay monthly for my mortgage. An apartment or condo rental would probably be cheaper or similar in monthly costs, but to get notably cheaper, I have to look outside the area easily accessible to my work and so would have to add more travel costs to my true housing costs.
    Off-topic:
    The definitions that I use are 'home' is the place where one lives, while 'house' is the physical structure. Changing the word used to describe the physical structure from 'house' to 'home', from what I can best tell, was a construct of the housing/development/real estate industry.

    YMMV

    Mike

  24. #24
    Cyburbian
    Registered
    Mar 2012
    Location
    California
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    37
    Recent article in the WSJ about this topic:
    http://online.wsj.com/article/SB1000...wpisrc=nl_wonk

    For all the blustering about the "new American dream" of the "rentership society," the elephant in the room that no one seems to mention is the long-term predictability of housing expenses. If you buy, you know what your mortgage payment will be 10, 20 years down the line (and eventually you won't have a mortgage, if you keep making the payments). If you rent, and you are not in a rent control unit (exceedingly rare), your rent can go up any amount at any time.Therefore you have no guarantee you will be able to keep living where you live. That might be fine while you are in a more mobile phase of life in your 20s, 30s, but pushing late middle age or beyond?

    I wonder if rent control will become less of a political hot potato as we start seeing more and more people wake up to the reality of having NO prospects to own property within their lifetimes.

  25. #25
    Cyburbian
    Registered
    Apr 2012
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    Sasebo, Japan
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    Quote Originally posted by bentobox34 View post
    Recent article in the WSJ about this topic:
    http://online.wsj.com/article/SB1000...wpisrc=nl_wonk

    For all the blustering about the "new American dream" of the "rentership society," the elephant in the room that no one seems to mention is the long-term predictability of housing expenses. If you buy, you know what your mortgage payment will be 10, 20 years down the line (and eventually you won't have a mortgage, if you keep making the payments). If you rent, and you are not in a rent control unit (exceedingly rare), your rent can go up any amount at any time.Therefore you have no guarantee you will be able to keep living where you live. That might be fine while you are in a more mobile phase of life in your 20s, 30s, but pushing late middle age or beyond?

    I wonder if rent control will become less of a political hot potato as we start seeing more and more people wake up to the reality of having NO prospects to own property within their lifetimes.
    Not if you have an ARM...

    Owning a home definitely anchors you to one location. I know. I owned and sold because I wanted to have the flexibility to go where the job market takes me. The trade off is that, sure I don't own my own home, but neither do the people with 30 year mortgages. lol.

    I think it certainly is a sign of the times. I would argue 100 years ago the world felt a lot larger than it does today; how many people were born, raised, and died in the same community? I think that type of population is shrinking and thusly the American Dream of owning a house with a white pickett fence is as well.

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