Why Housing Policy Can’t Abandon Homeownership
A call to Generation X and Baby Boomers: We need to do better
Highlights
There is a healthy debate among Canadian housing advocates on whether government policy should make homeownership attainable for the middle class, or whether the focus should be primarily, or solely, on renting.
In the view of MMI, the value of having options has been underemphasized, and there is a real loss of agency and well-being when the middle-class is locked out of homeownership, which extends beyond material deprivation.
Locking the middle class out of homeownership has significant political implications, including reduced support for social housing initiatives.
Gen Xers and Baby Boomers do not fully realize the corrosive impact on intergenerational unity when we tell Millennials and Gen Z that they should be fine with being denied the options that our generations took for granted.
Choice matters
In recent weeks, there has been a (mostly) healthy debate online about the importance of homeownership being a viable option for middle-class families. Our position, as articulated in the piece below, is that it is crucially important for young middle-class Canadians to have the option to either own or rent a home.
As we make clear in our MMI Detailed Look, this position is not inherently pro-ownership or pro-rental but rather pro-option (or pro-freedom or pro-choice):
Rental and ownership housing options: This should not be taken to mean that renting is preferrable to owning, or vice versa. Rather it is that the middle-class should not be locked-out of either option, and should be able to choose what best meets their needs. In a very real sense, freedom is a function of a person’s options, and being priced out limit’s one freedom and well-being.
Eliminating homeownership reduces the set of options and reduces opportunity, leading to a loss of agency and well-being for young Canadians. We believe it is a mistake to condense the well-being of an individual or family down to their inflation-adjusted income. We need to take a wider view of well-being, which incorporates the freedom of opportunity.
In other words: Choice matters.
These views are not universally shared. In a fantastic piece in the Toronto Star, Carolyn Whitzman articulates a contrasting vision, focused on shifting away from middle-class homeownership towards renting. This is a commonly held position among housing advocates across the political and ideological spectrum, although their reasoning often differs. Some believe that widespread middle-class homeownership is detrimental to society, while others argue that home prices have become too high for this option to be practical again.
At MMI, we share Whitzman’s views that we should make the experience for renters as positive as possible, and that renters should not be seen as “failed homeowners”, but rather that renting is an equally viable option to homeowners. We differ, however, from Whitzman and other rental-first advocates, who we believe are making two crucial mistakes:
They fail to differentiate between a family (or society) choosing to rent because it is their preferred option (which is good) and them being forced to rent because it is the only attainable option (which is bad).
When assessing housing policy, they view the world through a renter vs. owner lens. We believe it is more helpful to view the world through a lens of incumbents vs. new entrants. Whitzman’s Toronto Star piece notes that many existing government policies benefit homeowners, which is true. However, they benefit existing homeowners, not future homebuyers.
It is perfectly appropriate, and we would argue desirable, for governments to design policies to ensure that as many people as possible can choose between renting and owning. This increases the agency and well-being of the middle class, and democratizes housing and land ownership. We strongly disagree with the views of reports, such as this one, authored for the Federal Housing Advocate, that the “promotion of homeownership” has “catalyzed the financialization of housing”.
The politics of a lack of choice
We would also suggest that housing advocates should consider the broader societal impacts of a loss of opportunity that extend beyond simply material inequality or deprivation. The political implications alone of this are widespread, though not fully understood, and include:
Economic anxiety, particularly with young men, and the feeling that buying a home or saving for kids’ college is “impossible”, is fueling a rise in right-wing populism in the United States.
Not surprisingly, a Harvard Youth Poll finds that the young are increasingly losing faith in government institutions.
The phenomenon is not isolated to the United States; a study of 23 European elections in 11 countries finds that decreased economic status (such as losing the options that their parents enjoyed) leads to a rise in cultural conservatism and a decrease in support for redistributive policies.
The last point is critically important. Housing advocates have pointed to Canada’s meagre proportion of social housing as a primary driver of homelessness and a lack of affordability for lower-income households, and that tens of billions of dollars in government investments are needed. However, the political conditions to make that investment are more challenging if the middle are locked out of housing options. Research suggests that they will be highly unwilling to support robust and expensive housing programs for other people when they see themselves in need.
A call for intergenerational unity
People in older generations, particularly those who are already homeowners, must do what they can to ensure that the next generation has the same opportunities that they did, which includes homeownership. Not only because it is the right thing to do, but because it will lead to a better, more harmonious society.
We’re not sure that Gen Xers and Baby Boomers fully realize the corrosive impact on intergenerational unity when we tell Millennials and Gen Z that they should be fine with being denied the options that our generations took for granted.