Richard Florida commits an act of blasphemy in Atlantic Cities: Why the U.S. Needs to Fall Out of Love With Homeownership:
To get a better handle on this connection between property ownership and economic productivity, my colleague Charoltta Mellander ran a simple correlation analysis between homeownership and economic output (based on GDP) per person. The scatter-graph below plots the pattern. Though correlation is not causation, the trend is striking.
Less developed countries have consistently higher levels of homeownership, while more advanced nations combine higher levels of economic development with substantially lower levels of homeownership. …
American political rhetoric tends to equate rising homeownership rates with strong economic development. Instead, the opposite is true. The rate of homeownership declines as nations get wealthier.
Fascinating correlation. This finding is supported by the fact that most if not all the world’s “greatest” cities and economic powerhouses – New York, London, Paris, etc., etc. have a larger percentage of renters than homeowners. I wouldn’t be surprised in Detroit, for example, was the opposite.
I wonder what would happen if you graphed only OECD countries, rather than a global data set. My hypothesis is that the trend is driven by a cluster at the poorer end. My suspicion is that factors that drive high ownership at the bottom of the spectrum are effect of poverty:
– less access to finance (and therefore fewer owners of investment properties that can be rented out)
– low land values and quality of homes. If you can purchase (or squat on) land for next to nothing, and build your own home on it, that will drive higher ownership
– increased multi-generational housing – I’m not sure how home ownership rates are arrived at: is it percentage of population with their name on the title of their home, or percentage of homes occupied by their owners? A three-generational household owned by the grandparents is still an owner-occupied home. If it’s the former, how do spouses not appearing on title fit into the stats, and minor children fit into the stats?
– which leads into the idea of different thinking on “ownership.” Actual land titles with names on them, as opposed to “I live here, of course it’s mine.” Or places where people own the building, but the land is held in common.
At any rate, restricting it to the OECD takes away some of the noise from these factors, since they have similar stat-keeping rules and property ownership standards.
Interesting ideas, but Richard Florida omits population growth and immigration rates from his article, which can also explain some of the differences.
As well, the sheer size of Canada and the USA really make the maps very misleading. What is the rate of home ownership in McBride, BC versus Laval QC versus Vancouver? And real estate is local – what is the difference between north surrey and south surrey?
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That being said, I really marvel a the level of mobility americans have (or are willing to accept). flights are so cheap and many americans i know grew up in 1 area, went to school thousands of miles away from home, and live in a new area altogether.
There is a palpable confusion between the notion of house and home The U.S. has already fallen out of love with house ownership’ The have refused to be bribed by finance companies to borrow unrealistically and be there by manacled for life to the banks and the expense of the automobile A classic example is when media writes of President Obama saying “The most tangible cornerstone that lies at the heart of the American Dream, at the heart of middle-class life, is the chance to own your own home” and then confuses that (accidentally or deliberately) by equating that to mean ‘a house in suburbia’, which has evolved to be quintessentially fact anti-family and anti-middle class. New York and Shanghai are models to aspire to. LA and Detroit are dinosaurs going extinct.