Better Off Renting?
Professor Lynn Fisher Shares New Research
Posted December 17, 2008
With the number of home foreclosures at a record high and the number of home sales at a record low, renting is looking to many Americans like an attractive (even necessary) option. As it turns out, new research shows that -- in spite of the long-held American belief that home ownership is always preferable -- renting can be the superior alternative.
On December 4th, the Alumni/ae Association of the MIT Center for Real Estate, sponsored a talk in its Brown Bag Lunch series that explored renting versus owning -- with a special focus on today's unsteady financial climate. Professor Lynn Fisher, Director of the Center's Housing Affordability Initiative, shared her research on the relationship between housing tenure and employment outcomes. Her research is especially timely given the rise in delinquent mortgages, and the subsequent migration of marginal homeowners back to rental units.
Professor Fisher's findings challenge the traditional view that homeownership is superior to renting. Specifically, her research suggests that those who own homes tend to earn lower wages because they are less mobile, and so are not as responsive to changes in labor market demand. Some of the questions she explored included:
- Are the cities that have a higher percentage of renters at greater risk of experiencing out-migration if the local economy slows down?
- To what extent does this potential negative impact of homeownership offset the impact of positive social capital that is associated with homeownership?
- Is there a link between the percentage of homeowners in a city and the number of jobs that are created in that city?
- Do employers like to settle in areas with a more stable labor pool?
Hosted by New Boston Fund, the session was taped and is available. View the video (46:11).
