Choosing to rent, a culture transitions

Good news for the construction industry. According to an article out of Bloomberg News, the number of defects in buildings constructed between 2000 and 2005 doubled compared with the previous six-year period. The defects are going to yield a bonanza for those making repairs. Some are so flawed they are simply being demolished. The calculations don’t even count the repairs needed to deal with dangerous drywall imported from China.

Lawyers will make money out of the mess too.

The losers will be the builders held responsible for the repairs, insurers, and building owners. Numbers being thrown out are $15 billion for the Chinese drywall problem and even more for other flaws.

Defective houses combined with requirements of larger down payments and closer scrutiny of credit worthiness may make home ownership less attractive for some and unobtainable for others. In many countries home ownership is a lot less common than in the United States, but we may be moving toward a time when a smaller percentage of our own population owns homes.

This might be a good thing. For people with lower incomes the unpredictability of costs is a worry. What do you do if the furnace goes bad? A car needing an expensive repair can cause real hardship, but at least most of us don’t live in our cars. If necessary, we can even get rid of it. If the roof leaks in the house, it just has to be dealt with. Renting shifts that worry to the landlord.  

If home ownership was not subsidized, people would be freer to move. Owners who are stuck with a house they cannot sell may think twice before buying again. I know people who had to move for a job and are paying both a mortgage and rent creating real hardship.

Another reason some cite for the desirability of having more renters is that Americans would have less of their wealth tied up in houses. Some people are house poor. Yes, they live in a lovely home, but it takes everything they have to make the payments. As a nation we are rather like them. Too much of our wealth is tied up in real estate. Maybe that is not the best way to allocate our resources.

If it turns out that more Americans rent, we are going to need to take a look at the landlord-tenant relationship. It can be toxic to both sides. It is usually not a problem with very expensive properties, but that is a small part of the market. Landlords make money by keeping their costs low. I remember the landlord that absolutely refused to fix my air conditioning. I finally went to a lawyer and ended up moving although I would have preferred staying where I was.

My daughter’s apartment in Chicago was sold while she lived there. It went from being a well-managed building to an absolute nightmare. The new landlord would not fix anything. It bordered on uninhabitable.

On the landlord’s side, it is hard to evict people who don’t pay. Landlords face the risk of unrented property and damage from tenants who trash the place.

If we have more renters and fewer owners, we will need to find better mechanisms to resolve disputes and make sure that both renters and owners deal with each other justly. But the biggest change will be inside our heads; it will be cultural. After all, the reason a lot of people came to America was so they could own property.

Houses are not just shelter to us. A catalog of house plans published in 1927 declared, “Had the laws of democracy been practiced in every land and country in the last ten centuries, such a thing as paying rent for a home would in this age be entirely out of the question. The unborn desire in every human heart for a home would at least prompt all to possess their place of habitation.”

To possess your place of habitation has been the American desire since the 17th Century. Can we change a desire so rooted in our definition of who we are?