New US Homeownership Measure Puts People First

There was a youtube video sometime ago that argued about how life has vastly improved in every single aspect (with numbers about how 'stuff' has gotten universally more affordable), only housing has gotten more expensive relative to income and how that proves we have a better quality of life because of that.

It got me thinking that maybe the home ownership, or having a place you can call yours, disproportionately affects people's sense of content and wellbeing. Also, doesn't help that laws and government policy heavily favor home owners (perhaps because home owners vote at a lot higher rate than renters)

Looking at the statistics that are used to measure growth and performance at a population level are such a great window into how they themselves are opinionated stances.

The two measures are both great measures of house ownership that measure different things. The article frames the second one as better, and if you are looking to see the ownership proportion of people (for example as they note to look at the numbers of young people who live with parents) thats great. If however you care about the housing development decisions that will incentivise owner occupancy you might care more about the standard owner occupancy per household.

I often see this with respect to GDP/GDP per capita vs mean income and other economic measures, but its great to see a non economic measure like this compared in this way.

I find it hard to trust economic narratives when so many metrics cited upon further inspection do not really measure what they are implied to measure.

Or maybe we measure what is easiest to measure, not what is best.

I see this everywhere, though. Jobs data is really job openings not actual hires. Unemployment data is really paperwork filing not people out of work or retiring early. And now home ownership is really "count everyone in the home if the owner resides there".

Actually I don't think this metric goes far enough. In my opinion a homeowner should "own" their home. I.e should have majority equity in his or her home. An owner who pays 3% down is basically a risk bearer for the bank. The bank really owns the majority and is renting out the "owner". I don't think my opinion is fringe. It does measure the risks of not being able to make rent and getting evicted.

This isn’t “putting people first,” it’s baking in the cultural assumption that adults live separately from kin. Consider the examples:

> Housing unit 1. A couple owns their home. The woman’s parents live with them.

> Housing unit 2. A couple owns their home. Their son, a recent college graduate, lives with them.

> Housing unit 3. A man owns his home. A friend lives with him.

> Housing unit 4. A couple owns their home. Their two young children live with them.

> Housing unit 5. Three roommates rent their home. The owner lives elsewhere.

> As illustrated in Figure 1, these five housing units are home to 14 adults. Because four of these five housing units have their respective owners as residents, the owner-occupancy rate—the measure traditionally viewed as the homeownership rate—on the cul-de-sac is 80 percent. However, because only seven of the 14 adults are actually owners of the homes they live in, the HPOP is much lower, at 50 percent.

I think 1, 2, and 4 should all count as “owning their home.” The new measure is also a recipe for confounding attempts to compare the metrics over time, as demographic change brings in cultures that embrace multi-generational living. So what seems to be a drop in homeownership rate could instead reflect a growing and aging sub-population where the cultural preference is for parents to live with adult children instead of separately.

Perhaps this measure is useful to something but I find it directionally annoying as I don't think "higher is better" as it would be with the more traditional metric.

Here's an example from the page

- a couple and the wife's parents

- a couple and their college grad son

In this example the two couples (4 people) are counted as home owners and the 3 others (wife's parents, the son) as non owners - so the ownership rate is 4/7 = 57%.

On the traditional metric that scenario would be 100% because roughly each family owns its home which is good.

Now look at what would have to happen for the new rate to move to 100 - the wife's parents and the son would need

to move out and buy separate homes. In other words the metric "punishes" living with family even if that's what you want to do.

I find the traditional metric is more useful. If I am a renter that indicates the desire to have a separate place - so it makes more sense to "ding" the ownership metric.

[Invert, always invert]

If you're not a homeowner then "you'll own nothing and be happy",

Homes are not #1 best investment asset and they shouldn't be but the world works better

if people own homes they live in. It's a matter of not having the most significant part of your life

being exposed to the market volatility. Plus it nicely aligns incentives of the neighbourhood.

Go and check areas that are mostly rental and see how maintenance (of both homes and infrastructure)

is forgotten on the altair of rentmaxxing.

Of course if you're at $400k at FAANG, your best investment isn't realestate

but for majority of middle class and working class buying your own home, taking a good care of it and passing

it to your grandchildren is a very good investment. Also the society benefits.

The easiest way to solve the unafordability without putting everyone into negative equity is WFH. Land is only expensive near where traditionally the good jobs are. Just allow people to move to a low cost area, build there and WFH