Fortune Magazine recently pointed out that the new normal of our economic lives includes a return to renting rather than owing. A 2010 Harvard study showed between 2004-2009, the number of renters has increased 10%. With real estate values continuing to show no steady acceleration trend in the U.S. and the theory that those with negative equity in their homes will have to convert to renters, it bears watching whether this will become a longer term trend.
Having said that, there is now an open pro-renter policy lobby. Specifically, Richard Florida, while not the first to suggest it but certainly the most famous given he is the “it” boy of economics, argues that a distorted home ownership rate slows an economy’s ability to recover from downturns given many people are rooted to location rather than being able to pick up and pursue opportunity. The more practical consideration is whether debt-strapped governments can continue to allocate resources to support home ownership.
What seems to be happening is the recognition that certain people do not have to economic means to own a home and the market should be allowed to correct itself.
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