Saturday, September 25, 2010
On his New Geography blog for Forbes, Joel Kotkin has an essay on why he thinks there will be a resurgence in the housing market starting later this decade: Why Housing Will Come Back. He begins with a historical observation:
Few icons of the American way of life have suffered more in recent years than homeownership. Since the bursting of the housing bubble, there has been a steady drumbeat from the factories of futurist punditry that the notion of owning a home will, and, more importantly, should become out of reach for most Americans.
Before jumping on this bandwagon, perhaps we would do well to understand the role that homeownership and the diffusion of property plays in a democracy. From Madison and Jefferson through Lincoln’s Homestead Act, the most enduring and radical notion of American political economy has been the diffusion of property.
Kotkin then notes that in recent years, and especially in light of the mortgage crisis, the single-family homeownership ideal has been criticized from both the right (government overpromotion) and the left (sprawl, new urbanism, environmentalism). His response:
Yet for all the problems facing the housing market, homeownership–not exclusively single-family houses–is not likely to fade dramatically for the foreseeable future. The most compelling reason has to do with continued public preference for single-family homes, suburbs and the notion of owning a “piece” of the American dream. This is why that four out of every five homes built in America over the past few decades, notes urban historian Witold Rybczynski, have less to do with government policy than “with buyers’ preferences, that is, What People Want.
Kotkin goes on to explain several reasons why he believes housing will come back, after adjusting to the market correction imposed by the economic recession. Why I find most interesting is that his prediction is based less on economics or law than on demographics:
As boomers age, the two big groups that will drive housing will be the young Millenial generation born after 1983 as well as immigrants and their offspring. Sixty million strong, the millenials are just now entering their late 20s. They are just beginning to start hunting for houses and places to establish roots. Generational chroniclers Morley Winograd and Mike Hais, describe millenials in their surveys as family-oriented young people who value homeownership even more than their boomer parents. They also are somewhat more likely to choose suburbia as their “ideal place to live” than the previous generation.
These tendencies are even more marked among immigrants and their children. Already a majority of immigrants live in suburbia, up from 40% in the 1970s. They are attracted in many cases by both jobs and the opportunity to buy a single-family home. For an immigrant from Mumbai, Hong Kong or Mexico City, the “American dream” is rarely living in high density surrounded by concret
An interesting take. For more writings on urban theory from the center-right perspective (e.g., Why we Have to Learn to Love the Subdivision--Again) see Kotkin's New Geography website.