Eric Belsky on Rethinking the Cult of Home Ownership

Excerpted from the Los Angeles Times, November 12, 2009

We are a country still in the thrall of homeownership.

Ironically, owning may make more sense to some people today than when housing markets were booming. After all, chances are greater now that people will buy at or near the bottom. But should Americans assume that homeownership is always the right choice? We should spend as much time thinking about how public policy can encourage intelligent housing choices as we have thinking about how it can encourage intelligent mortgage choices. The choice to own or rent comes first.

Let’s assume that the way to get out from underneath the weight of foreclosures is to not let speculators and homeowners at risk of falling behind again roll the dice.

Let’s instead consider programs that aggregate ownership of properties, especially two- to four-unit ones, in the hands of nonprofits that can rent them out. These small complexes are estimated to account for up to two in five foreclosures. It might make more sense to get these properties into the hands of nonprofits that own many properties, so that a single rental vacancy constitutes the loss of only a small fraction of rental income. By contrast, one vacancy could constitute up to 100 percent of the rental income needed to make the mortgage payment for a resident/owner of a single small property, making that a less stable investment.

It’s time we make homeownership just one option in a more innovative, affordable and broader housing market.

Eric S. Belsky is executive director of the Joint Center for Housing Studies at Harvard University. He wrote this commentary for the Los Angeles Times.