Dumb Reason #2: Renters are happier than homeowners.
I sort of laughed to myself the first time I heard this because it went against everything I believed. I decided that it must be the opinion of a few people who were never educated to the benefits of homeownership. When I saw this theory being espoused in a Wall Street Journal opinion piece, I was shocked.
Richard Florida is author of "The Great Reset: How New Ways of Living and Working Drive Post-Crash Prosperity" and director of the Martin Prosperity Institute at the University of Toronto. In his essay for the Journal, Homeownership Is Overrated, he makes several interesting points. He also said this:
But cities with high levels of homeownership-in the range of 75%, like Detroit, St. Louis and Pittsburgh-had on average considerably lower levels of economic activity and much lower wages and incomes. Far too many people in economically distressed communities are trapped in homes they can't sell, unable to move on to new centers of opportunity.
The cities and regions with the lowest levels of homeownership-in the range of 55% to 60% like L.A., N.Y., San Francisco and Boulder-had healthier economies and higher incomes. They also had more highly skilled and professional work forces, more high-tech industry, and according to Gallup surveys, higher levels of happiness and well-being.
Let me try to understand. The people in Detroit, St. Louis and Pittsburgh are less happy than the people in New York, Los Angeles, San Francisco and Boulder. And, the reason is because of home ownership rates? I want to point out that Detroit, St. Louis and Pittsburgh are all great American cities. I have been a guest of each of the cities several times. They are the broad shoulders that have carried this country's manufacturing load and enabled populations to trek westward. It is true that they have recently seen some difficult times. Each of the three cities is making tremendous strides toward economic recovery.
However, to compare them to the economic capital of the world (NYC), the entertainment capital of the world (LA), hubpage's ninth most visited city in the world (SF) and the #19 city in TripAdvisory.com's Top 25 Destinations in the US (Boulder) seems unfair. Most people in almost any other city in the world might be less happy!
Let's try a different way of determining whether renters are happier than homeowners. Why don't we ask them? Fannie Mae's National Housing Survey 2010 reported:
- 58% of current renters believe now is a good time to buy a house
- 75% of current renters believe owning a home makes more sense and
- 67% plan to buy a home at some point in the future
When they asked current renters for the major reason to buy a house, these were their answers (they could pick multiple answers):
- 78% said it was a good place to raise children
- 75% said because they would feel safe
- 70% said because you have control of your own space
- 66% said owning a home would be a good way to build wealth
- 54% said paying rent is not a good investment
If renters are happier, why do more than half think now is a good time to buy, three out of four believe owning a home makes more sense and two out of three plan to buy a home in the future?
If you believe renters are happier, you would also have to believe the majority enjoy living in a less safe environment, which wouldn't be as good a place to raise children; a place where they have less control of their space and a place that won't enable them to build wealth.
It just doesn't make sense!
We will cover Dumb Reason #3 - Limited mobility is harmful to the country next week.