Today homeownership is at an 18-year low, but in 2006 it was at its all-time peak. The aftershocks of the financial and subsequent foreclosure crises are still being felt today and have contributed to a rentership society in the U.S. This situation is seen by some not so much as an economic step backward as a sign of a system slowly adapting to new realities. It is thus healthy and facilitates economic recovery. Others argue that the rental market is increasingly being controlled by Wall Street and that a rentership society could easily turn out to be a nightmare.
Daniel Gross, author of the book Better, Stronger, Faster: The Myth of American Decline and Rise of a New Economy and economics editor at Yahoo Finance, claims that the transition from an ownership society to a rentership society “will unleash a wave of economic efficiency that could fuel the next boom.” Gross explains that a rentership society allows a dynamism in the U.S. economy that ownership does not: An unemployed or underemployed worker can take skills to the region they are needed, says Gross, something that is a lot less likely to happen “if he’s underwater on his mortgage.” Gross says that economists have even found a frequent correlation between high homeownership levels and “persistently high local unemployment rates.”
In an article written by AlterNet reporters Rebecca Burns, Michael Donley, and Carmilla Manzanat, however, rentership is not a situation that has organically come about as some sort of adaptation to new realities. Rather, it is investment groups that “have worked diligently to bring a ‘rentership society’ into being.” In the wake of the foreclosure crisis, wealthy corporate investors saw a chance for profit and gobbled up homes in order to convert them into rental properties. While some commentators have perceived the subsequent rise in home sales and prices as part of a recovery in the housing sector, Burns, et al calls this “recovery” nothing more than an investor feeding frenzy. Homeowners, they say, are largely absent from the picture.
Invitation Homes is one example of these investor groups. This subsidiary of the Blackstone Group, which, with assets worth $266 billion is the world’s largest private equity firm, is an avid participator in what the AlterNet reporters say is “basically a massive land grab.” Real estate agents in cities like Atlanta and Phoenix have begun to notice representatives of Blackstone and other investors showing up at housing auctions with suitcases full of cash. Occupy Our Homes organizer Rob Call says that Blackstone representatives will often show up the day after they have purchased a house at auction and tell the former owner than they can either rent the home they used to own or be evicted. It goes without saying that aside from bank auctions, all-cash investors are crushing home buyers who want to live in the homes they buy. It is highly advantageous for a home seller to accept a cash offer rather that one that comes attached to a mortgage and its required, costly, and time-consuming, inspections and reports.
Gross says it was the “vast mortgage-political-financial complex” that so thoroughly convinced Americans to value homeownership “as a good in its own right.” But these days, says Gross, “it simply makes more sense to rent,” adding that “the more people who do it, the more socially acceptable and desirable it becomes.” In 72 percent of American metropolitan areas, it is cheaper to rent than own. Gross says a rentership society will allow consumers to continue consuming and buying, which is needed for an economy trying to get back on its feet. “Follow the example of corporations,” says Gross, by consuming more efficiently through renting. While some view home ownership as a realization of the American Dream, a cornerstone of a strong community, and a keystone of emotional security and financial affluence, Gross says we should instead look to the wisdom of Thoreau: “And when the farmer has got his house, he may not be the richer but the poorer for it, and it be the house that has got him.” Using a metaphor that incorporates one’s job along with one’s domicile, some would argue, is not comparing apples to apples.
By Donna Westlund