I have a long history of home ownership. Of the 37 years since I graduated from college, I’ve lived in my own home for nearly 30. I’ve owned six different homes, scattered between Walnut Creek and Seattle. And I’ve been a committed homeowner, tackling home improvement projects on most of the homes.
I continue to own a home and to do home improvements. This blog is being written during a break in pre-holiday painting projects. Indeed, because of my wife’s color sense, there are fifteen cans of paint in a variety of shades and glosses stacked on the back counter. It makes me yearn for my first condominium. When I purchased that home, all of the walls were off-white. Five years later, all of the walls were still off-white and I didn’t own a paint brush. I was young, naïve, and unmarried.
Although I’ve generally been an active homeowner, I’m uncertain on the subject of urbanism and home ownership.
On one hand, home ownership gives a sense of belonging to the community. Although I don’t have the data to support this belief, it seems reasonable that homeowners care more deeply about their urban neighborhood and are more likely to participate in activities that strengthen the neighborhood.
On the other hand, a key element of urbanism is the availability of alternative housing options within a neighborhood, from apartments for young adults to single-family homes for families to luxury condominiums for active seniors to assisted living. To move fluidly between those options requires a light-footedness that is inconsistent with homeownership where a move requires a sale that can be a slow and expensive process.
Adding to my uncertainty is a pair of recent articles. Writing in Atlantic Cities, Richard Florida finds that homeownership correlates inversely with overall economic activity. Florida admits that correlation does not equal causation, but provides several reasons why the correlation may occur. He notes that a weak economy may lead to a lack of employment mobility which encourages buying a home in one’s community. He also suggests that weaker economies offer a lack of alternative investment opportunities which make a home the default investment.
Complementing Florida’s work are the comments by recent Nobel Laureate Robert Shiller, noting the homeownership between 1890 and 1990 was generally a neutral investment, performing roughly the same as the stock market. He describes the belief that home values will rise forever, implying that homeownership is a financial necessity for households, as a recent and unsustainable phenomenon.
To what does all this add up? Nothing definitively. But it certainly suggests a need for continued study and discussion. And I still suspect that the tax deduction for home mortgage interest is an idea whose time has passed. (And I write that as a homeowner.) As I’ve suggested before, the economic disruption that would result from abrupt termination of the deduction would be excessive. But phasing out the deduction over 20 years might be reasonable.
And now, there’s a paint brush with my name on it. I miss off-white.
As always, your questions or comments will be appreciated. Please comment below or email me. And thanks for reading. - Dave Alden (firstname.lastname@example.org)