Monday, 30 August 2010

Wanting to Own a Corner of the World: People, Housing Dreams and Public Policy

The Globe and Mail on Saturday explored "The Death of an American Dream," that of owning a home and using it as a hedge against retirement. The collapse of the housing market there means that a a sizeable percentage of home "owners" have mortgages larger than the resale value of their houses: in five states, the percentage is running at 25 per cent or higher.

The New York Times has also had wealth of stories on various aspects of what is happening in the housing market there. "At the peak of the bubble, the rate of homeownership approached 70 percent," Joe Nogera wrote on Friday. "Now it is falling toward 65 percent — which is more or less where it was before all the housing madness of the last decade. That means that millions of Americans who were briefly homeowners need to become renters again. "

Wanting to own your own corner of the world is a very strong desire, not just in North America but in places with cultures and economies that are quite different. The informal construction of suburbs around Brazil's cities is testament to this: James Holston's excellent Insurgent Citizenship: Disjunctions of Democracy and Modernity in Brazil details the lengths that people there go to build their own houses and claim a little land. Singapore constructed a city of highrises in tune with the idea of home ownership: now more than 80 per cent of residents live in government-constructed flats and more than 90 per cent own the place where they live.

In North America, part of the incentive to buy apparently has been the idea that rising housing prices are an investment. Those who bought into that part of the dream have certainly come to grief as prices fall in the US. But the story is not all bleak: at least they have something to show for their money. Had they rented they would not have anything. What this means for public policy is that ways should be found to support the housing dreams of ordinary people to own something, but not to get rich as some were led to believe they could in the halcyon days of the real estate bubble.


Anonymous said...

I think the desire to own one's own dwelling is socially and culturally conditioned; I'm suspicious of ideas about inherent attachment to property. What people want is security and comfort, and there are other ways of providing that.

This Wikipedia list is very partial and oddly, only concerns the so-called First World or developed countries, while housing ownership rates would also vary among poorer or middle-range countries (such as Brazil) depending on rural vs urban population but no doubt policy factors as well as cultural ones.

It does correspond in short to other studies I've read. I don't think that one can say (taking countries I'm familiar with) that people live better in Italy or Spain than in France or northern European social democracies. There is ghastly social housing in France but also extremely pleasant places that are HLM or logements de fonction. Prosperous Netherlands and mostly prosperous Germany (except much of the former DDR and some rustbelt areas) have the lowest rates. I think these nations provide for retirement income through different schemes.

I live in a housing co-op and while this can't provide retirement income - that is not its aim - it allows people who would never be able to afford a down payment on a mortgage (except with the foolish way they were doled out in the US a few years back) to take part in improving and beautifying their own dwellings. I think we'll have to contemplate alternatives, in part due to the fact that many people nowadays live alone and not all will have the wherewithal to acquire real property.

lagatta à montréal said...

Anonymous was lagatta, as some may have surmised.

Dunno what happened.

Mary Soderstrom said...

Having a stake in your housing is very important, it seems to me, and coops certainly provide that.

Take a look at the Holston book: it's well written and extremely interesting to anyone interested in community and political movements. At the moment McGill has a copy, but I think I'll request it at the Montreal library.