In her grudging defense of the GSEs, Bethany McLean still seems to think falling home ownership rates are inherently a bad thing, especially for poor people and minorities:
. . . This summer, the Census Bureau reported that the homeownership rate had fallen to 63.4 percent, the lowest level in 48 years. (It had peaked at 69 percent, in 2004.) . . . The decline is particularly pronounced in minority communities. At the Congressional Black Caucus Foundation’s annual legislative conference this year, housing advocates pointed out that the homeownership rate for the black population has decreased from nearly 50 percent in 2004 to about 43 percent, its lowest level in 20 years. It’s projected to continue to drop.
Pundits have argued that the homeownership rate was, and maybe still is, too high, because too many people were getting mortgages they couldn’t afford. But if people don’t own (and don’t sleep on the street), they rent — and rents have been steadily rising since 2000, while incomes have not kept pace. In the third quarter of this year, rents increased by 5.7 percent year over year, according to Morningstar . . .
So people should own rather than rent because rents are rising quickly? That may be happening lately, but over the long-term the costs of renting vs. owning tend to rise at the same rate for the simple reason that they compete against each other. In the meantime, I can think of other ways to help the poor and minorities besides urging them to saddle themselves with debt and chain themselves to communities whose economic prospects may or may not improve in coming years. Germany’s homeownership rate is just 53%, ten points lower than the U.S.’s, and the Germans seem to be doing rather well. The sooner U.S. policymakers drop their homeownership-as-panacea fetish, the better it will be for the people they are trying to help.
What do you think? Let me know!