Saturday, August 14, 2010

What is a renter?

Richard Florida, among others, has suggested that the United States overindulges in homeownership, and that rental housing gives flexibility to people such that they become more creative. I have no quarrel with the idea that homeownership has been oversold. A paper I wrote with Shelley White that showed that owning could be good for children has gotten cited a lot; a paper I wrote with Dean Gatzlaff and David Ling (that I thought was just as good as the paper with Shelley) that suggests owners maintain their homes no better than landlords has barely gotten cited at all.

But a lot of the story about why renting is great involves New York City. There can be no doubt that New York is an innovative and creative place, and that it has a lot of renters by national standards. But about 2/3rds of rental units in New York City are rent controlled or rent stabilized. If one occupies a rent controlled or stabilized apartment, he gets a lot of the benefits of owner-occupancy: reduced housing cost risks, and security of tenure. Renters in New York share far more of the bundle of rights than renters in most parts of the country; they are almost like owners expect for the possibility of capital appreciation. San Francisco, San Jose and Los Angeles, three other cities one might count as innovative, also have some form of rent control (what's more, property tax law in California encourages owners to move less than they otherwise would).

The point is that the owner-renter dichotomy is really a false one, as there are shades of tenure in between. These shades might matter a lot.


David Barker said...


Are you advocating rent control here?

Richard K. Green said...

Goodness no, David! I was just making the point that simple correlations between tenure status and innovation mask the fact that tenure can mean a whole host of things.

David Barker said...

Your point is a very good one.

You can see how a reader might connect "owning could be good for children," "the story about why renting is great involves New York City," and "If one occupies a rent controlled or stabilized apartment, he gets a lot of the benefits of owner-occupancy" and conclude that rent control is good.

But maybe we should consider the possibility that if there are benefits to ownership, and rent control simulates aspects of ownership, perhaps they partially offset the disadvantages of rent control.

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