More Findings On The Dis-Utility of Homeownership in America

Richard Florida, listed in the Wall Street Journal as "a director of the Martin Prosperity Institute at the University of Toronto,"wrote a provocative editorial a week ago in the paper entitled Homeownership Is Overrated.

Florida's central contention is that today's world of greater job mobility has made homeownership a much less valuable activity than it was in the past in America.

A few years ago, the Journal published a piece by a researcher in Washington, D.C., providing evidence for this among low-income workers. Her findings were that the lower-income group of Americans had to move to follow work, as they are semi- or unskilled. Thus, houses tie them to places that may lose work, and cause them to default on the mortgage.

Florida, however, did something a little different. He examined relationships between homeownership, local economies and incomes. What he found is, at least to me, astounding.

Here's what he wrote,

"But cities with high levels of homeownership- in the range of 75%, like Detroit, St. Louis and Pittsburgh- had on average considerably lower levels of economic activity and much lower wages and incomes. Far too many people in economically distressed communities are trapped in homes they can't sell, unable to move on to new centers of opportunity.

The cities and regions with the lowest levels of homeownership- in the range of 55% to 60% like L.A., N.Y., San Francisco and Boulder- had healthier economies and higher incomes. They also had more highly skilled and professional work forces, more high-tech industry, and according to Gallup surveys, higher levels of happiness and well-being."

Thus, Florida found not only the same downsides to homeownership among lower-income workers as the earlier researcher, but he also found associations between higher incomes and less homeownership in cities with healthier economies, as well.

Isn't it ironic that our federal government began to push homeownership so heavily, from both parties, just when our economy began to value mobility more than ever? Especially as pensions have become more portable?

Perhaps, as Florida suggests, we really should reconsider the sacred mortgage deduction and let homeownership drift down to the 55-60% range. Based upon his research, it would seem that propping up homeownership beyond that interferes with the natural mobility of labor and economic activity in America.

Yet another in the growing list of federal government-originated market-distortions in our modern economy.