Wednesday, March 21, 2007

Renting -- the new "American Dream"?

   One of the sidebars of the great 1995-2006 housing price boom is that rental units also experienced a sharp increase in costs.  According to a stat-filled article in Apartment Finance Today magazine, an astonishing 44 percent of renters now pay more than half of their income on housing.  In addition to higher prices, one reason for this phenomenon may be that so many upwardly striving people in recent years made the jump to homeownership; the homeownership rate in the United States is now nearly 69 percent, up from 64 percent in 1994 -- partial proof of the theory that the housing price boom was largely demand-driven. 

   With all the ominous news about a boom in defaults on mortgages loans granted to people who perhaps shouldn't have qualified, we may soon see a return to more Americans accepting renting as a long-term housing choice. 

Apartments_2   What implications does this have for land use policy?  The message is straightforward -- governments should do more to permit the construction of apartment buildings, especially in built-up sections of metro areas.  Why should law allow more apartments?  The reasons are numerous, but here are some:  (1) With more than 300 million Americans (more than double the number of 1950), more than half of whom live in large metro areas, we have to accept the idea of denser housing.  (2) With growing concern over environmental protection, denser housing is the best solution to "sprawl."  (3) With much of America's population growth today arising from immigration, the new Americans are perhaps more likely to accept an apartment as their "American Dream" than did previous generations.  (4)  With fewer children in most families, and with those children more likely to spend their free time typing on a laptop than playing in the back yard, apartment-living increasingly fits with today's culture.   

   One of the first ways to start a return to apartments is for governments -- cities and suburbs, perhaps with prodding from state governments -- to loosen outmoded zoning laws to allow for more apartment construction.  Let's get with the 21st century …

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