In the wake of the Great Recession and mortgage foreclosure crisis, the rate of home ownership has declined and renting is on the rise, particularly among those under the age of 35. As young academics, what are the questions we should be asking about this demographic and economic shift?
An article by Kriston Capps on City Lab discusses the rise of renting in the United States and highlights the increase in the rental of detached single family homes in the suburbs, a strategy that even some investment groups are getting behind. As the author notes:
the appetite for rental housing, which traditionally takes the form of multifamily housing, is transforming the suburbs and its traditionally single-family homes. With affordable housing harder and harder to find in places such as Austin, New York, and Washington, D.C., renters are finding themselves in the suburbs in the single-family homes built for the last boom. Developers are retrofitting the financial reality of the suburbs—from ownership to rental societies—without changing the suburban home whatsoever.
The rise of the “renter nation” has been a regular news item in the last few months, and has received occasional coverage even going back a few years. The move of renters to suburban single family detached homes is a variation on that theme, but an intriguing one. It might be little more than a demographic blip. It could be a frictional correction that was inevitable following a period of over-development of single family homes and a relative dearth of affordable multifamily properties, coupled with several quarters of tightened credit markets. And it might only be a correction experienced in a handful of suburbs. But even if the shift is not indicative of more durable or widespread cultural and economic phenomena, it serves as a potentially useful natural experiment for anyone interested in housing and metropolitan policy. After all, the dominant paradigm of home ownership–roughly two thirds of the U.S. population own their housing units–is not an inevitability. It is the result of a system of regulatory choices about taxes, finance, zoning, building regulations, transportation, and property rights. Among OECD countries, the U.S. is roughly middle-of-the-pack in its home ownership rate, well above Germany and Switzerland but with a more robust rental housing supply than Spain or Ireland. And we can easily forget that the U.S. was not always a country of home owners–in 1940 the home ownership rate hit a national low of 44 percent. The census numbers also demonstrate that the balance of owning and renting is surprisingly flexible, with some states witnessing a fifth of their population or more change tenure choice in a single decade. Thus, if the rise of single-family home rental in the suburbs is a good thing, there are ways to maintain it and even increase it.
From the perspective of those interested in studying and shaping metropolitan areas and making them better places to live and work, whether such renting is a “good thing” depends on more than just how renting versus owning affects the well being of indiividual households. It depends, too, on the effects such a shift has on neighborhoods, local governments, and regions. Here are some questions that researchers should consider asking:
- Where do the people renting in the suburbs work? The spatial mismatch between jobs and housing in U.S. metropolitan areas is well known. Workers who can afford to live in the suburbs often still work in the city center or in a commercial or industrial sub-center in another suburb, typically commuting by car. Those with lower incomes remaining in older core cities and inner ring suburbs lack access to suburban jobs because of public transit systems that often lack reliable regional coverage. If renting makes suburban housing stock more affordable, it might give lower income households better access to jobs
- Will home owners have less resistance to renters who don’t live in multifamily housing? Renters often generate a NIMBY response from home owners, even though the evidence is mixed at best linking property value decline and proximity to affordable rental housing. This fear often leads local officials to separate higher density properties from lower density units, placing the former in commercial and light industrial zones. The land use separation means that those who rent–who still tend to be lower- and middle-income–are concentrated into specific neighborhoods. But the rental of single family detached homes is relatively invisible–no prospective buyers can point to a multi-family property and assume it’s a sign of poor or transient families in a neighborhood. Of course, variation in housing characteristics will still allow income sorting regardless of tenure choice. Within a single type of housing stock, however, it may be possible to achieve a broader range of household incomes. Many policy makers regard stable mixed income neighborhoods as a desirable but culturally and politically difficult outcome. Single family home rental could be a way to head in that direction.
- Do the households renting in the suburbs have different preferences? If renters have a systematically different demographic and political profile than homeowners, then this would suggest they will also vote differently. This could affect a range of issues, from the viability of mass transit in the suburbs to the potential for metropolitan tax base sharing. Of course, how this plays out depends on the next question…
- Will those households be politically active? Renters have generally had a weaker political voice in local government than home owners: as non-owners they don’t have a large asset whose value is easy to track, and they tend to remain in the community a shorter time. This doesn’t mean they are completely apathetic about their elected representatives and the bundle of goods and services they receive for their monthly rent payment. But it does mean that if the variation in tenure choice tracks variation in income–with lower-income households tending to rent–then the preferences of high-income households may gain even greater political weight.
What are some of the other questions we should be asking in light of these changes?
Thomas Skuzinski is a doctoral candidate in urban and regional planning at the University of Michigan. His research focuses on local and regional politics and governance in metropolitan areas in the United States.