In the wake of the home mortgage bust there needs to be a reevaluation of every assumption about residential housing. Is ownership always better than renting? Is appreciation always better than equity as a tool for wealth creation? Is bigger in the suburbs always better than smaller in town?
The composition of families is different. The kind of housing people need is different. The design for space and density is different. Federal policy is different. Therefore, how local leaders think and respond on matters relating to housing must be different.
We know there are an increasing number of households where residents span three generations or more. We know that job losses have led families to double-up with parents, siblings or children. We know that being tied to a house that won’t sell has prevented people from moving to a different part of the country where a good job is available. While these conditions are not new to history, they are new to the lives of most Americans today.
Financial experts predict that the Great Recession will impact the behavior of 20-40 year olds for their lifetime much in the way the Great Depression did for their grandparents. If true, that will affect consumer spending, savings rates and homeownership indexes for a long time to come.
The results are likely to be market-driven demand for rental housing within close proximity to employment and entertainment. Second, prospective owners will strike a more balanced valuation between renting and owning. And third, longer-term views will take hold that regard a house as a place to live, stabilize monthly expenses, and possibly increase wealth through equity-building.
For the present, local policy makers will need to put aside several time-tested responses and fly by the seat of their pants. Fortunately, pragmatism and adaptation are what they do best.