Increasing Home Ownership Does Not Reduce Demand for Rental Units

9th July 2019 Off By binary
start trading binary options

Sorry to pick on a NYT editorial with which I mostly agree, but the assertion that plans by Democratic presidential candidates to increase homeownership, “if successful, could ease the demand for rental units,” really needs to be called out.

Let’s say these plans are successful. Where do the additional units come from that the new homeowners now occupy? Some may come from existing homeowners who decide to sell at the higher prices resulting from these plans, and then become renters.

Some of the units may come from the stock of rental units. Contrary to what the piece implies, god did not designate housing units as either ownership or rental units. Apartment buildings frequently switch from being rental to condominiums, if the sale price justifies the expense of the conversion. Furthermore, roughly one third of all rental units are single family homes. These can be converted very easily to ownership units if the price justifies it.

Long and short, policies to increase homeownership should be evaluated based on their impact of the affected population. It is not always the path to secure wealth, as people alive during the housing bubble years know. But as a way to reduce the cost of rental housing, it is just foolish.

 

Read more about eu binary options trading and CFD brokers