In his housing policy
speechin Phoenix today, President Barack Obama sounded two discordant notes on whether people should rent or buy their homes.
He talked about the need for people to be responsible and only buy homes if they can afford to:
In the run-up to the crisis, banks and the government too often made everyone feel like they had to own a home, even if they weren’t ready. That’s a mistake we shouldn’t repeat. Instead, let’s invest in affordable rental housing. And let’s bring together cities and states to address local barriers that drive up rent for working families.
Now, what could have made people feel like they had to own a home, even if they weren’t financially ready? Maybe it was partly because politicians kept saying things like this:
I’ve come to Phoenix to talk about that second, most tangible cornerstone at the heart of middle-class life: the chance to own your own home. A home is supposed to be our ultimate evidence that in America, hard work pays off, and responsibility is rewarded. I think of my grandparents’ generation. After my grandfather served in World War II, this country gave him the chance to go to college on the GI Bill, and buy his first home with a loan from the FHA. To him, and to generations of Americans before and since, a home was more than just a house. A home was a source of pride and security. It was a place to raise children, put down roots, and build up savings for college, or a business, or retirement.
Americans want to be middle class, and if we keep telling them that homeownership is the “most tangible cornerstone” of middle classness, and the best available evidence of whether you’ve worked hard and been responsible, they’re going to keep wanting to buy houses.
Why not instead emphasise that renting — that is, not taking all the money you have in the world and putting it into a highly leveraged real estate investment — is a perfectly valid life choice, even for people leading prosperous, middle-class lives?
Obama (and other politicians, since promoting the cult of homeownership is a decidedly bipartisan vice) should take a page from Related, a developer of luxury rental apartment buildings in New York City.
Related owns a complex in midtown Manhattan called MiMA. MiMA is extremely expensive; a two-bedroom apartment there can rent for as much as $US16,000 a month. And the ad campaign for MiMA is extremely douchey, as you can see in the photo at left.
I love this douchey ad campaign.
I love it because it insists that a rental apartment can be not just “decent,” as Obama said twice in his speech today that rentals should be, but aspirational. If renting an apartment is good enough for the extremely hot, extremely wealthy couple in this ad, it must be good enough for the middle class.
Obama did allow today that an affordable and thriving rental market is important not just for Americans who “can’t yet afford” to buy a home, but also for those who “don’t want to.”
But he also framed his discussion of the rental market as creating “options for families who aren’t yet ready to buy,” as though not wanting to own a home must result from a temporary incapacity that you will eventually overcome.
And he gave the speech in front of a backdrop that said “A Home To Call Your Own.”
It’s OK to be a renter. I’m a renter and I’m glad to be a renter. And if we convince middle-class Americans that it’s OK to rent, there may be less demand for the sort of high-leverage mortgages that fuelled the housing bubble in the first place.
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