Why Homeownership Has Hurt Us

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I own a home and a profitable business, feels great. Bought my home at the top of the market in FL, well maybe not so great. Renting sounds good to me in hindsight.
Banks don't know enough about deploying capital to businesses and innovative enterprises. I wish they would.

Jack of FL 12:20AM November 22, 2008

True many people don't treat a home as a business decision and few budget repairs in the cost of owning. Recently many people were encouraged to buy a home they couldn't afford or were too large. Still owning is motivational. Why go to work if you can't own something for your efforts. It is hard to run many small businesses out of an apartment, not to mention many associations. It gives you a reason to put up with the jerks who didn't take management 101 or were sleeping during class.
It has been a middle class objective to have a paid for home at retirement. A home is where you can make creative choices and play your music too loud without someone beating on the wall. Better to decompress after work at home than a bar. A home facilitates family a positive social structure. We are still far more mobile than many asian countries where you buy a home and keep it in the family for generations. I think we could learn something from them. Mortgages may be a necessity sometimes but using your shelter as a cash register to buy toys is absurd.
We are alledgedly a classless society, ha ha, the ability to own a home helps keep the unscrupulous from taking advantage by price fixing, unsafe conditions, and poor maintenance. Why do you think there are rent controls in several urban areas?
In the early years of our country immigrants were stuck in squalid tenements. I would argue the more desireable urban dwellings are not generally rentals but condos, co-ops, lofts, etc. We could do much better in urban planning from a social and energy perspective i.e. transportation. In rural settings there has traditionally been a shortage of housing available.

Timothy of WA 7:17AM November 09, 2008

Renting may be OK for those who don't do anything very physical. I doubt I could have found a landlord amenable to my rebuilding a transmission or doing the finish work on 85 custom bike frames in my living room. Much less the goofy projects my three children did on the way to becoming successful industrial designers & construction contractors. Maybe the one who is an excellent chef could have done that in rentals but she has also absorbed the building mentality that surrounded her. I think that was enhanced by the freedom to change her environment that was possible in a home without the constraints of having a landlord. In addition to all that, my wife was usually using a bedroom for a darkroom. I know that is possible in rentals (we did that too)but it was way easier when we didn't have to consult the landlord about it.
Not saying those processes are impossible in rented homes. We just felt a bit less constrained in our own place.

James O. of WA 12:00PM November 04, 2008

Questionable premises and assumptions--there are other ways to construe this issue
Bad employers make people mobile.
Reluctance to leave family, friends makes it hard to move. There are high social costs to being kicked around the country. I've 4 decades of experience with this.
We don't know that this writer does in fact live a respectable life.
Renting limits your household size, choices in pets and hobbies. Some of us live big. just try living amiable with 5 other people in a 2 bedroom apartment.
So it would be better to have a landlord class who owns everything, and the rest of us camp out? UUUUUhhhh, I'm speechless. Can you spell F-E-U-D-A-L.

Mary of NY 11:02AM November 04, 2008

Especially me and millions of Americans who can't afford to buy a home in the first place. The subprime mortgage mess is a prime example of people buying something they can't afford to pay in the first place. Renting is the perfect alternative for me and I don't have to worry about taxes and a exorbitant mortgage.

Marcelo Esguerra of NJ 5:21AM November 04, 2008

Owning my own home, debt / mortgage free means all I need to make is enough to pay taxes & utilities. If I rent, I am at the will of the landlord to toss me out.

of OH 4:42AM November 04, 2008

"It is an investment that increases perpetually and gives security" - Come on, usaneill. Have you been living in a cave the past 2 years?
Often you do have to get permission to make large changes, (permits, neighbors) and if I want to paint my rental house - which I take very good care of - I will paint it. I would paint it back before leaving, of course, or lose my deposit. We also have added ameneties for our own enjoyment of "our" home - No, we can't take them with us, but we couldn't take the $20 grand we spent on landscaping our last "owned" home either, and trust me, you don't get all that back when you sell.
Besides, I don't think Mr. Phelps said no one *should* own a home, just that it was unhealthy for so much of the financial economy to be tied up with housing, and from what I can see, he is right.

Michelle 7:03PM November 03, 2008

The point of home ownership is that you aren't at the "mercy" of anyone else.
You design and decorate your home as you want. You add amenities as you want or need. There are so many reasons... But the number one is no one can take it from you once it is paid for.
There will be fear-mongers that will negate that premise, but bottom line is: pay for it, pay your property taxes, and it will always be yours.
It is an investment that increases perpetually and gives security.

usaneill of TN 9:51AM November 03, 2008

As he so eloquently stated, he doesn't know where home ownership got is orgin, "I don't know how that goal came to be established. And I don't know why it was established, really"
Try every history lesson ever learned! Has he not heard of "The declaration of independence." It wasn't written to mean only one thing...
I get very upset when I hear a guy like this! Please move back to Europe. I will throw in some cash to get you there if you promise not to come back!
Amazing, and who gave this guy a "Nobel Prize for economics"

Thomas Ulrich of CA 10:02PM November 02, 2008

Reggie from GA hit the nail on the head (and didn't have to ask permission to do so). Edmund Phelps is right that there is no need to own the home, from a pragmatic standpoint. However, people being emotional beings and wanting to be the masters of their own domains, need a domain of which to master. It's is clearly the ability to choose paisley and put-on an addition that make ownership of paramount concern to many.
Perhaps the real focus should be on creating an environment that allows people to rent the home but lease the land. If only owning the house and "improvements," as they're called, then an occupant can enjoy the ownership independence and still not be tied to something that costs the full weight (inclusive of the land). This too could provide mobility since the emotional depth of ownership would not extend to the land (the physical plot) only the dwelling itself.
Difficult to convince people of this kind of ownership split? Many nations (and even Hawaii now, for its remaining land) only lease the land to builders/occupants; the state retaining ownership. And since we (unlike the wisest of those three little pigs) only build our single-family homes with sticks anyway, we are not really building dwellings that should last a lifetime. Our children do not intend to live in our homes when they grow up, anymore than we live in the homes of our parents today. Of course I'm generalizing, but this nest-leaving seems to be what fuels the new-home construction. Fewer children being born per family combined with the ever-increasing number of available homes, means that the older homes will not retain their value forever. At some point, the market has its little collapses; in some cases bigger than others.
In Europe -- where land is far scarcer than in the US -- there is also a desire to purchase one's homes. However, those homes either already existed and were owned by family or they were more-urban dwellings that could be renovated after purchase. The permanency of European homes combined with the scarcity of land lends itself to living close to where one was born.
There is a further limitation in Europe that we don't have in the US: language. To move from Chicago to New York, one needs only to change the accent and the ball teams, not the language. That allows for mobility that doesn't exist for most Europeans without requiring the knowledge of a second language and the acceptance of vast differences in culture/history.
Those finding the collapsed home prices a great time to buy properties might also want to consider buying the land from an occupant in need but not buying their house. Then lease the homeowner the land at an equitable price. Someday, they will feel the pulls of mobility and sell their house to someone else willing to buy only a house while leasing your land. It happens in New York flats, why not in suburbia?

Joseph of MI 4:05PM November 02, 2008