Felix Salmon has a long post reproducing many charts from a Fannie Mae document demonstrating that the American romance with homeownership is far from over. Apparently 70 percent of the public believes that buying a home is a safe investment, almost as high as the number (74) who think a savings account is safe, and way more than the number (50) who think “buying government or corporate bonds” is safe. I’d be interested to know what efficient markets theory has to say about widespread and persistent misperceptions about this kind of thing.
At any rate, it seems that in America it’s always a good time to buy a house:
I think this, however, is probably the most important part of Salmon’s post:
It’s worth noting, in this context, that the top two reasons to buy a home are that “it means having a good place to raise children and provide them with a good education”; and “you have a physical structure where you and your family feel safe”. Reading between the lines here, I think that what we’re seeing is the effect of rental ghettoes, and the fact that neighborhoods with high levels of homeownership tend to be safer, and have better schools, than neighborhoods which are mostly owned by landlords. That’s a negative aspect of homeownership, in the grand scheme of things, but it’s clearly here to stay: no one’s anticipating a more sensible world where it’s commonplace to be able to rent a house in a good school district.
Right. If you first immerse yourself in anti-homeownership arguments and then go out and look at the actual country, renting a home turns out to be surprisingly impractical in a variety of situations. Outside of New York City, the market for rental properties that you can confidently stay in long-term (not just a house whose owner is living someplace else and might kick you out of next year) is very thin, and concentrated on serving the segment of the population that doesn’t have the means to put a downpayment together. If we could shift off that equilibrium—something that would start to happen if we began to phase out the mortgage interest tax deduction—we’d do ourselves a lot of good.
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