Sunday, July 22, 2012
The Wall Street Journal's Jeanette Neumann reports that real estate investment companies that are buying up foreclosed homes and renting them out are seeking to securitize their rental income stream. Perhaps that's more evidence, not only that more Americans are likely to live in rentals, but that our relationship to "home," our concepts of rental and ownership, may take new forms.
If investor-owners can think long-term about rental income, perhaps renters can also take a long-term stance, and enter into contracts more like those of commercial tenants -- say, five or ten-year leases that lock in current prices, or leases that in some way exchange various levels of commitment for price breaks, or ring new variations of rent-to-own or share any increase in home value.
Much as I like my own home, the housing bust has driven me to reflect -- as I suspect it has most homeowners -- what a money pit it is. That in turn has made me question the cliche that people only "invest" in a property -- emotionally and with sweat equity as well as financially -- if they own it. In fact, having grown up in New York at a time when rental was a middle class norm there, I know that's not true, or only to a degree: renters get very attached to their apartments, though they're less likely to put in granite countertops.
Richard Florida has touted new arrangements that allow people more mobility and flexibility -- for example, leases with real estate companies that enable the renter to switch cities at will, moving into a dwelling provided by the same multi-regional landlord. In some ways that sounds potentially anonymous and sterile, like always living in hotel rooms. The impulse to shape a home according to one's own creativity and taste and ability (and income) goes deep: the home is the extended body, and ownership is freedom in that respect.
Perhaps the future renters' freedom celebrated by Florida will turn out to be more of a surrender to corporate control. I was going to write a few minutes ago that most people are amateurs when it comes to dealing with contractors, and perhaps an innovative corporate landlord could offer tenant-clients a menu of upgrades and remodelings, with quality control. But the need for oversight doesn't go away when you're dealing with a large corporation -- it intensifies, as the megabanks' shenanigans should remind us. The tradeoff between the convenience of outsourcing the responsibility for home maintenance to a landlord and the autonomy gained by taking on that responsibility yourself is probably irreducible, though the forms of ownership and tenantry may change somewhat.
If America's middle class continues to cede its wealth to the wealthiest, the era of 60+ percent homeownership could come to seem a paradise lost, in which a nation of freeholders shaped their little or not-so-little strongholds in blissful autonomy.