February 15, 2009
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Residential Rigidity
Richard Florida, writing about the economy and home ownership, makes an important point (emphasis mine):
As homeownership rates have risen, our society has become less nimble: in the 1950s and 1960s, Americans were nearly twice as likely to move in a given year as they are today. Last year fewer Americans moved, as a percentage of the population, than in any year since the Census Bureau started tracking address changes, in the late 1940s. This sort of creeping rigidity in the labor market is a bad sign for the economy, particularly in a time when businesses, industries, and regions are rising and falling quickly.
I feel like super-flexible, low-hassle housing in big cities is going to be a growth industry. Why can’t I just go and live in New York for six months? I realize that extremely rich people flit around like this all the time. How about something for everybody else? Something like a housing system with buildings in big cities such that it’s easy for you to “swap” your studio in San Francisco for a studio in London.
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Comments
It's a tough thing. Most people don't have the employment flexibility to easily move. On the other hand, if you lose your job or need to change jobs, the inflexibility of housing (especially if you own) WAY reduces your ability to move in order to find new work.
At the same time, it seems like there ought to be an alternate equilibrium to the one-year lease with first-last-security deposit. Month-to-month leases (in lieu of one-year contracts) or five-year-mini-mortgages (in lieu of ownership) may ultimately be better options than what we have now.
Also, it'd be interesting if there were a new chapter of limited bankruptcy (I'm serious!) -- if you lose your job or your ability to pay, you can restructure your housing arrangements and other long-term financial commitments without having to declare full-blown bankruptcy.
Ultimately, though, big-time structural change probably isn't going to happen unless the residential market craters. Demand for cars collapsed, which is why people have begun getting creative with their financing. Demand for apartments in New York, even with the financial crisis, just isn't there.
Another thing: perhaps this is an issue that can only be addressed in places with sufficient population density and a migratory work population.
For instance, Hong Kong is a city that sees several thousand short-term expat workers vying to live in the few "desirable" neighborhoods on the Island. To meet the demand, we have a few dozen serviced apartment complexes of varying price & quality. The renter gets all the benefits of hotel living, but the space feels like his own. Additionally, fully furnished apartments are quite common.
It's a great solution overall. But could something like this take hold in say, Cleveland, Philly or Phoenix?