The conventional wisdom says homeownership is a growth spur. This was especially the case in the fordist mass production economy, where long-term employment was the rule for many and home-buying prompted purchases of automobiles, appliances and consumer durables.
Now, maybe not so much. That is, according to new analysis by Joe Cortright which suggests that homeownership may actually dampen economic performance in this highly mobile creative age.
Initial commentary from here (Creative Class Group).
People tout homeownership as a marker of economic success. But high levels of home ownership seem to be strikingly correlated with deeply troubled metro areas. Whereas really vibrant, flourishing cities have lower levels – New York, Los Angeles and San Francisco are at the bottom in terms of home ownership.
There’s probably many things are at work here:
- New rental housing isn’t getting built in slow growth or declining metros.
- Prices are lower in declining metros, so more people can afford to buy.
- Slow growth cities have older average populations (Tampa and Pittsburgh are the two “oldest” cities in the US group sampled. Since older people are more likely to own their own homes, this probably accounts for a significant part of the difference in home ownership rates.)
- High growth cities are attracting new residents (and immigrants) who disproportionately rent their dwellings.
They noted that homeownership is what keeps stagnant or declining cities from losing people even faster: they are “sticky”, keeping people in declining cities longer than they should rationally stay given the opportunities elsewhere, because too much of their wealth is tied up in their house, with few potential buyers. People loathe to abandon functional capital stock like housing (although it is happening in places like Detroit). Non-homeowners are quicker to move to cities with more opportunity, leaving behind a population with a higher percentage of homeownership.
This was lifted from here (via CEOs for Cities).
Many of our parents’ generation worked toward the great Australian Dream and owning your own home in Australia is still thought to be the clearest and most quantifiable ticket to security & success :: there’s a certain amount of status attached to finally making the move to the mortgage side of the fence.
If you wanted more info on Australian stats – home ownership, affordability yad yada then check out the Australian Urban Housing Institute here.