Where We Dwell Is Changing Fast

The American homeownership rate has declined.

By William A. Collins

Time to live,
Out on my own;
But economics
Keep me home.

Owning your own home makes a lot of sense. Or at least it did, back when workers enjoyed steady jobs and when mortgages were owned by the bank downtown. There's security in knowing what your monthly payment will be for the next 30 years and that no rapacious landlord can jack up your rent.

Ah, those were the days. Now it's different. No one's job is secure any longer, and that reasonable old mortgage payment can suddenly become a monster. Or the value of your house may collapse to below what you owe. 


Or worse, your tidy mortgage will be sold by good old Main Street Mutual to Amalgamated Monstrosity, a foreclosure factory. And now with property values so deflated, whole neighborhoods can suddenly go sour. Then to cap it off, your grown kids may move back in.

For these unsettling reasons and more, American homeownership has declined from a peak of 69 percent of households in 2004 to 66 percent today. This, of course, is great news for landlords who can more easily troll the dispossessed for hapless new tenants.

But it's a bummer for builders. Great bargains abound in older, flagging subdivisions, and only the courageous developer will start a new one. Buyers are spooked and lenders are tight-fisted. This phenomenon is especially scary because our economy has traditionally leaned heavily on construction to yank us out of recessions. Not this time.

Today's slack demand for subdivisions hints at other distressing trends as well. One is that despite the dodgy economy, some clever entrepreneurs are still managing to become wealthy. They will no longer settle for Moonstruck Lane or Daphne Drive. They want gated communities and towns with fine schools. They are leaving middle class behind.

Millions more are leaving the middle class in the opposite direction. Many are lucky if they can jump off the escalator at "working class" without falling into full-fledged poverty. In any case, rentals are the new normal, and stability is often no longer in the cards.

America is daily growing more segregated by income. This shift, in turn, is hurting local schools because they rely on local property tax revenue for nearly half of their revenue.

On the bottom rungs of the housing ladder, the omens are even more troubling. Government-owned housing projects, mostly old, are being demolished, replaced primarily by Section 8 vouchers, which are provided via local governments to the poor to help cover their rent for privately owned houses and apartments. Across the country, there are long waitlists to qualify for these programs.

Meanwhile, the homeless population is growing, more folks are living in vans, shelters are jammed, and a the highest share of young adults are back with Mom and Dad since the 1950s. It's not pretty. And a startling number of downscaled families are paying half their annual income or more for rent.

Meanwhile, federal tax policy still favors homeowners. Deductions are generous for property taxes and mortgage interest on homes, while renters may deduct zilch. Their rent pays the landlord's taxes and interest, but since tenants don't own, they get no deduction.

It's enough to make one want to Occupy.

OtherWords columnist William A. Collins is a former state representative, and a former mayor of Norwalk, Connecticut. otherwords.org