Article: The Homeownership Society Was a Mistake: Real estate should be treated as consumption, not investment by Jerusalem Demsas

If you are interested in learning more about the myths and realities of homeownership in America, you should read the article “The Homeownership Society Was a Mistake” by Jerusalem Demsas. The article will challenge your assumptions, broaden your understanding, and inspire you to rethink your housing choices and preferences. Don’t miss this opportunity to gain a new insight into one of the most important and controversial issues of our time.

Recommendation

Home ownership is part of the American Dream, conveying notions of stability and success. Yet, for some, home-owning proves more of a nightmare. For the less well-to-do, a home may represent an outsized portion of their net worth and carry unsustainable burdens. Atlantic staff writer Jerusalem Demsas considers the issues surrounding home ownership and renting. She raises cogent arguments for policies that would make housing more affordable across the socioeconomic realm. Demsas notes that, for the good of society, perhaps housing should be a home rather than an investment.

Take-Aways

• Homeownership has long been seen as a cornerstone of financial stability in the United States.
• Owning a home is not advantageous for everyone.
• Public policy should focus on affordable and abundant types of housing to address all manner of life circumstances and income levels.

Summary

lower-incomeHomeownership has long been seen as a cornerstone of financial stability in the United States.

Conventional wisdom says that owning a home provides a financial resource and security – security against unemployment or unexpected emergencies, and a resource to finance higher education or other major life events. The stereotype holds that only young people and those with dodgy finances rent. For many Americans, a home is their largest store of wealth.

“It is a truth universally acknowledged that an American in possession of a good fortune must be in want of a mortgage.”

But beneath this rosy notion of home ownership lurk uncomfortable realities. Ownership can be more a problem than a solution. Certain socioeconomic cohorts are more subject to the negative aspects of owning a home than others: the young, families with lower incomes and people of color. Homeownership does not always guarantee security, and it may even hamper the ability to make better housing available to society at large.

Owning a home is not advantageous for everyone.

Whether a home is a worthy investment depends on the time of purchase and the availability of decent financing. Timing the purchase and sale of a residence may not properly align with the owner’s ideal time to move. You live in your residence; you don’t trade it. Betting on real estate markets is risky, and location matters: Living in America’s coastal cities has long been desirable, but the COVID-19 pandemic could drive many workers to more remote locations, potentially devaluing urban locales.

Financing a home apportions funds that people could otherwise save. More than 80% of the wealth effects of home ownership derive from price gains. Labor markets drive land values, and the luck of timing and location creates value in residential real estate. The homeownership system is by nature adversarial: Rising home values derive from a dearth of housing for others. Potential homeowners are crowded out, as higher prices make housing less affordable for many.

“A home is bound to a specific geographic location, vulnerable to local economic and environmental shocks that could wipe out the value of the land or the structure itself right when you need it.”

For lower income families, homeownership is a high-risk proposition, as a home represents a substantial portion of their wealth and subjects them to hazards such as natural disasters or local and regional economic swings. They also bear expenses such as property taxes, utilities and ongoing upkeep. The rich, by contrast, hold much of their wealth in diversified marketable securities.

Public policy should focus on affordable and abundant housing to address all manner of life circumstances and income levels.

Home values are a function of owners’ income, geography and race. Since 2010, nearly three-quarters of home price increases accrued to the wealthy. Higher risk areas are more affordable, catching those less well-off in a vicious circle as the market forces them to buy in less desirable locales. Home values in majority Black neighborhoods are about one-quarter less than home values in white neighborhoods, and price appreciation is greater in white neighborhoods. The 2007–2009 Great Recession witnessed far greater housing price declines in Black neighborhoods (53%) than in white ones (17%).

“Just as higher-wealth households spread their assets among various equities and mutual funds, so should the government encourage and aid lower- and middle-income households in doing the same.”

Policymakers need to address housing as a consumable rather than investable item. Creating inexpensive and varied types of housing would raise ownership equality across ethnic and generational strata. Policy should help lower income families save through passive investments, and it should scrap the tax advantages that draw so many into home ownership. Finally, governments should overhaul rental markets, affording tenants greater legal recourse and creating rent-stabilization measures.

About the Author

Jerusalem Demsas is a staff writer at The Atlantic.

Genres

economics, sociology, public policy, urban studies, personal finance, history, journalism, opinion, social commentary, and advocacy

Review

The article “The Homeownership Society Was a Mistake” by Jerusalem Demsas challenges the conventional wisdom that owning a house is a desirable and beneficial goal for most Americans. The author argues that homeownership is not a natural market phenomenon, but a heavily subsidized and regulated institution that has many drawbacks and risks for individuals and society.

The author cites various sources and studies to show that homeownership does not always provide financial security, stability, or social mobility, and that it can be especially risky for young, middle-income, low-income, and Black families. The author also claims that the obsession with homeownership undermines the ability to improve housing outcomes for all, by creating artificial scarcity, inflating prices, distorting land use, and reducing mobility and innovation. The author concludes that real estate should be treated as consumption, not investment, and that policy makers should focus on providing affordable and accessible housing options for renters and owners alike.

The article is well-written, informative, and persuasive. The author uses clear and engaging language, provides relevant and credible evidence, and addresses potential counterarguments and limitations. The article is also timely and relevant, as the housing crisis in the US and other countries has become more acute and visible in recent years. The article offers a refreshing and critical perspective on a topic that is often taken for granted or romanticized in popular culture and politics. The article also raises important questions and implications for the future of housing, urban development, and social justice.