A New Perspective on Housing Tenure
Posted by Jake Wegmann, Alex Schafran and Deirdre Pfeiffer on September 27, 2016
Those of us who work in housing and housing policy know how complicated housing tenure, which describes the legal status under which people have the right to occupy their accommodation, can be. The most common forms of tenure are home-ownership (both owned outright and mortgaged) and renting (which includes public and private rented housing). Even something as seemingly straightforward as owning a house is not that simple. Depending on your mortgage, the local and state laws, your cultural norms, whether your property is governed by a Homeowners Association, the type of structure it is, the basic legal, economic, and even emotional nature of the relationship between a household and its house can be very different.
These subtle differences in housing tenure for homeowners become even bigger when one considers renting, condominiums, residential hotels, community land trusts (CLTs), etc. Despite its image as a “home owning” nation, the United States has an exceptionally diverse array of tenures, so we took a deeper look at the issue to estimate how many Americans live in different types of tenure, what existing housing tenures are supported and protected and which are risky, and what all this means for policy and politics.
The first step for us was moving beyond a one-dimensional view of tenure, which sees renting on one end, owning on the other end, and various hybrids in the middle. Not only does this view exacerbate tensions between housing advocates, it also misunderstands tenure. Instead of this one-dimensional view, we argue that tenure should be thought of along two dimensions: wealth-building and degree of control. Think of these as the financial and political aspects of living in a housing unit, respectively: how much wealth you could gain or lose as a result of living there, and the extent to which you get to decide whether and how to renovate, refinance, sublet, sell, move out, or make major decisions about how and if you live in your home.
One-dimensional views assume wealth building and degree of control go together, and sometimes they do. An apartment renter will lack certain controls over how the building is run, and will certainly not benefit from it financially over the long term. By contrast, a single-family homeowner, especially one that is not part of a homeowners’ association (HOA), will have broad latitude over most decisions and in turn accepts the risks and benefits of the home’s changing value.
But in other cases, wealth building and degree of control are decoupled rather than linked: for instance, the owner of a manufactured home in a typical manufactured housing community will have control over their home but will likely not benefit a great deal from it financially because they don’t own the land it rests on. Many nonprofit and alternative housing tenure facilitators offer what we call the “third way” (mutual housing associations, limited-equity co-ops, community land trusts), which present different mixes of control and wealth-building potential. Different legal arrangements in different cities and states—like rent-control and anti-eviction rules—change this mix.
To make this clearer, we developed a “map” of housing tenures, above. While not fully comprehensive, it helps us see that the rent/own dichotomy doesn’t hold water. The real picture is more complex. But this map also allows us to show two important things:
First, we can analyze just how prevalent these different types of housing are. Despite the idea that we are a nation of homeowners, our study reveals that only 49 percent of American homes are single-family ownership, and the number drops to 41 percent when we exclude people in HOA’s, which significantly impacts one’s control (and at times, one’s wealth-building potential). In order to talk about rental housing, including affordable or below-market rate housing, we need to be more specific. We estimate that 19 percent of Americans live in market-rate rentals, 2.6 percent in subsidized rentals, and 1.6 percent as renters in Accessory Dwelling Units (ADU) or owner-occupied multi-family homes. Below-market rate condos, CLT units, single-family homes with Accessory Dwelling Units (ADUs), owner-occupied units in multifamily buildings, co-ops (including limited equity) and cohousing units make up a combined 2.2 percent of the housing stock in the United States.
The full list shows a remarkable diversity of tenures that match our large and remarkably diverse nation, but the real value of this analysis is that it enables us to look at which tenures are subsidized and which are protected. They are often related, but they each represent two different dimensions of public policy. We subsidize single-family home ownership nationally, but don’t necessarily offer a lot of protection against bad loans or other dangers. We have numerous protective tenures like CLTs, but they rarely receive major subsidy. Some tenures like subsidized rentals get both subsidy and protection, while others like informal housing arrangements or an owned home with ground rent (like in a manufactured or mobile home)generally get neither.
By analyzing this new two-dimensional tenure map against both subsidy and levels of protection, we can start to see more clearly the relationship between where housing policy puts its money, its legal protections, and which types of tenures are favored or not.
Our numbers are good estimates at best, and our map of protection and risk is only generalized for the U.S. and may look different locally. But even this very general map and analysis of tenure helps us push beyond the “renting vs. owning” debate, as well as focus on alternative models. It shows us the diverse reality of American housing tenure, as it exists today, and so rather than focusing on promoting one type of tenure, the question has to become how to support and protect all American homes in their full diversity. What is a good tenure for one household may not work for another. What is a protected tenure in one place may be risky in another. One form of tenure may work for a household at one point in life, but not another.
Rethinking tenure in this way helps us envision changes to our vast, complex American housing system as a whole to ensure that all Americans, regardless of what type of housing unit or what type of community they live in, have a safe and secure place to live. How we get there in terms of policy and politics is a question we will address in an upcoming post. In the meantime, we welcome your thoughts.
Image credit: Joe Wolf via flickr, CC BY-ND 2.0)
About the author more »
Jake Wegmann has been an assistant professor in the Community and Regional Planning program in the School of Architecture at the University of Texas at Austin since 2014. His research focuses on the intersection between housing affordability, land use, and real estate development. His prior professional background was in affordable housing development, both for- and nonprofit, in Denver and San Francisco. Alex Schafran, Ph.D is lecturer in Geography at the University of Leeds. A planner by training, he holds an MA in Urban Planning from Hunter College (CUNY) and a Ph.D. in City & Regional Planning from the University of California, Berkeley. His award-winning writing about planning, cities and regions has appeared in numerous professional and scholarly journals. Prior to his academic career, he worked for a decade as an organizer, advocate, policy analyst, and planner for a variety of social justice organizations in New York and California. Deirdre Pfeiffer is an assistant professor in the School of Geographical Sciences and Urban Planning at Arizona State University. Her research interests include housing strategies to meet the needs of America’s aging and diversifying population, the outcomes of the recent U.S. Great Recession and foreclosure crisis, and the relationship between urban growth and racial equity. Her current research appears in Journal of the American Planning Association, Journal of Planning Education and Research, Housing Studies, and Housing Policy Debate.