The rise of the renter-chic

In housing, the retro-chic - or renter-chic - voices offer solace. They explain that not only is it OK to rent, it is better for everybody, including the body politick. For a century Americans lusted to own homes; government, with a slew of subsidies, abetted that lust. Those would-be homeowners wanted a stake in the American dream; they wanted security; they wanted to sink roots in a neighborhood.

Now a choir of the renter-chic sings the joys of rentership. Pundits are sprouting data to comfort all renters, particularly those who have lost homes to foreclosure. They want people to recognize the initial drive to own a home as folly. Their arguments pour forth: Renters have more discretionary income to invest (no more emergency runs for plungers). Renters who invest in something (OK, not the stock market, but an FDIC-insured instrument at a solvent bank) will reap more than under “normal’’ (a term that this recession has rendered meaningless) housing appreciation. Renters have flexibility to move to a better job. Renters, who are not shackled to leaky roofs, clogged drains, and moribund furnaces, have more free time. Renters can easily downsize or upsize, depending on family size.

There is some truth to these bromides. Obviously, renting has benefits, and obviously some people should not own - indeed, many should not have bought - homes. People with no steady jobs, who could not afford the monthly payments, should not have bought. Nor should people who had no savings for a down payment. And the legions of people who saw a house as an investment destined to reap mega-returns should have stayed put as renters.

In this downturn, the buyer-investor-flippers have been the most disappointed. They saw homeownership as an investment strategy, not primarily a lifestyle one. That worldview is quintessentially American. In other countries - some with higher homeownership rates - people build and buy homes, intending to live there forever and then pass them on to their children. But until a decade ago, most Americans also bought homes primarily as places to live. They hoped the home would be a hedge against inflation (aka increasing rents), and they counted on the enforced savings embedded in traditional amortizing mortgages. They did not expect to flip their home into a boondoggle.

Although the pitfalls of homeownership are clearly visible, there are advantages (some real, some only perceived) of homeownership. Homeownership gives the person a genuine stake, physical as well as psychic, in a neighborhood. Because homeowners are not so mobile, people form stronger ties with neighbors. Children fare better in owner-occupied homes, in some measure because of that stability. As for renters’ greater mobility, sometimes renters benefit from that flexibility. But sometimes renters are forced to move because the owner has upped the rent, or sold the building. Most importantly, many people want to own. They want the security that past generations have wanted.

The task of government is to maximize transparency. The lender must reveal the fine-print codicils, the caveats, the total monthly cost - not just at the time of purchase, but for years afterward. The buyer must understand all the risks. The task of government is not to steer the family toward owning when renting is the better option. Today’s crisis gives the government the opportunity to put forward a balanced housing policy that stresses the need for a decent, affordable place to live - whether owned or rented.

Optimistically, this recession will pass. The Dow, employment, and the Gross Domestic Product will all rise. And when the economy recovers, Americans are likely to once again want to buy the places they call home.

Nicolas P. Retsinas is director of the Joint Center for Housing Studies at Harvard University