Guest Post by Keith Porter
I got several follow ups on my piece about Housing the other day.
Sheryl Owen kindly sent me the ABC's of Home Ownership, which I enjoyed, thank you.
Luc forwarded on this from an other LinkedIn member, John Weatherby: Comment on "The Sceptical Market Observer: Is home ownership the problem?"
"From the other side of the pond, I would have to say that there is a sentimentality to this. It may be similar in the UK. The US considers its roots as a farming nation. We still have not left the medieval mentality that power is tied to land. Therefore the more evenly land is distributed the more even power is distributed is still the thinking here. The United States still puts a higher social status on land ownership even in an economy that has been long removed from being driven from land rents.
"I really do not see an economical nor political reason in today's world for preferring land ownership over renting. We are far removed from the fief system. However, the fief mentality that land equates to power and status still exists. In the US those losing houses due to mortgage crisis are being billed as homeless. Politicians and citizens seem to think it is somehow horrible that these people might rent a home instead of own one. More renting might actually increase the ability of workers to move from job to job and decrease the natural rate of unemployment because fewer people are tied to a region because they have a house there that they presently can not sell.
"One thing that may be showing in the data, and I will note this is pure speculation, is a difference in attitudes possibly driving a difference in investment. In cultures that see less power in land it is possible investment is driven more toward productivity. In the US, there is a lot of financial investment in real estate. Much of that investment is not really productive. It is mostly a transfer of land and perhaps some wealth. Less social emphasis on land might allow more financial capital to flow to real capital and perhaps better growth rather than land speculation or the mere transfer of assets. The US government's emphasis in tax codes and encouragement of home ownership has no doubt distorted production and investment from some sectors into single family home production and financial investment."
And finally, This week's Economist also talks about the subject in the article.
This blog was originally posted on the Sceptical Market Observer.
