The latest New Yorker carries an essay by James Surowiecki arguing that America needs to reconsider its crush on home ownership. Surowiecki writes, quite reasonably, that ownership isn't good for everyone.
His major concern is that homes are hard to sell. In investing terms, this is called a lack of liquidity, which is bad because it means you're stuck when prices fall. He goes on:
Homeownership also impedes the economy's readjustment by tying people down.... It's good for people to be able to leave places where there is less work and move to places where there's more.
Surowiecki is following other writers fascinated by the work of Andrew Oswald, an English economist who wrote in a 1996 paper that areas with higher home ownership rates also have higher unemployment rates.
Examples in the United States include Alabama, Michigan and Mississippi -- areas with some of the nation's highest rates of ownership and unemployment.
If people could leave those places more easily, the people would benefit. So would states that have jobs. As for Alabama, Michigan and Mississippi...
(This theory isn't as favorable to the Boston area as it might seem at first glance. Though our ownership rate of 64.7 percent in 2006 was among the lowest in the U.S., one of the consequences is that our residents can move elsewhere more easily if our economy sours. The upside is that our residents can move within the region more easily to adjust to smaller shifts in the economic weather.)
Unfortunately Surowiecki closes by tiptoeing past the consequences of his argument, which presumably include adjustments to the plethora of government policies that reward ownership and punish renters.
To paraphrase Harry Truman, it would be more interesting to read a one-armed economist.
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