How distant is the return of the rent-to-own option I remember was all the rage when rates topped 10% and higher back in the early eighties? Will the BTR group see an opportunity to become the BTRToOwn group, either carrying the loan or selling it bundled, which might be just as problematic and even more risky and data-noisy? My first mortgage was in 1984 @ 14%. Current rates seem tame by comparison. So, rates may not be the problem. Credit scores are, on average over 700 with the best rates available for a slightly higher score. Are we even still certain that the old ‘own a home, participate in the American dream’ paradigm holds true today? It’s easier to vacate a home if the neighborhood changes as renter for whatever reason (i.e. the arrival of a data center) or job availability changes. It’s a complicated situation and will be interesting to watch and see whether the pendulum has any swing left.
There are some firms doing rent-to-own programs. Mortgaged ownership is a better option, and where households are renting-to-own, regulators should loosen up mortgage access so those households can use the superior process.
I agree that rates aren't that important. The rate jump from 2021 to 2022 was very big, and it only temporarily slowed down owner-occupier household formation a bit. The main problem has been regulatory limits to mortgage access and temporary capacity limitations because housing construction was beaten down so far in the 2010s.
RE One of your earlier points, one could theoretically prosecute a case that BTR was crowding out *investment* in other forms of housing like missing middle, which many urbanists might prefer.
But any honest analysis of missing middle finance would reveal that it’s not suffering from crowding out; it’s suffering from massive regulatory impediments put in place to streamline the suburban buildout LONG before the mortgage crackdown.
To paraphrase Scott Sumner---we need more expensive housing to get affordable housing. There are other schools of thought when it comes to managing development, of course. This one cuts close to home: https://news.bgov.com/bloomberg-government-news/debt-laden-boston-suburb-weighs-buying-closed-college-campus
For goodness sake.
How distant is the return of the rent-to-own option I remember was all the rage when rates topped 10% and higher back in the early eighties? Will the BTR group see an opportunity to become the BTRToOwn group, either carrying the loan or selling it bundled, which might be just as problematic and even more risky and data-noisy? My first mortgage was in 1984 @ 14%. Current rates seem tame by comparison. So, rates may not be the problem. Credit scores are, on average over 700 with the best rates available for a slightly higher score. Are we even still certain that the old ‘own a home, participate in the American dream’ paradigm holds true today? It’s easier to vacate a home if the neighborhood changes as renter for whatever reason (i.e. the arrival of a data center) or job availability changes. It’s a complicated situation and will be interesting to watch and see whether the pendulum has any swing left.
There are some firms doing rent-to-own programs. Mortgaged ownership is a better option, and where households are renting-to-own, regulators should loosen up mortgage access so those households can use the superior process.
I agree that rates aren't that important. The rate jump from 2021 to 2022 was very big, and it only temporarily slowed down owner-occupier household formation a bit. The main problem has been regulatory limits to mortgage access and temporary capacity limitations because housing construction was beaten down so far in the 2010s.
RE One of your earlier points, one could theoretically prosecute a case that BTR was crowding out *investment* in other forms of housing like missing middle, which many urbanists might prefer.
But any honest analysis of missing middle finance would reveal that it’s not suffering from crowding out; it’s suffering from massive regulatory impediments put in place to streamline the suburban buildout LONG before the mortgage crackdown.