Owning a home versus renting

In a world where everyone longs to own a home, it can be quite shocking to come across a headline like, “Homeowners: A New Class of Fools”, or a statement like, “Homeownership is for Suckers”.

I recently read a story with the above headline in which a 32-year-old homeowner was regretting why she bought the house in the first place.

“All my life I thought this was what I wanted. But as beautiful as this property is, I see nothing but a money pit and a trap,” she was quoted as saying and swearing that not only would she never buy an individual house, she would be shocked if her friends would as well.

The CNBC story said that more and more young American professionals are choosing to live in an urban, agile setting rather than be susceptible to a life of endless house maintenance, limitless property tax hikes, and a concrete burden of never being able to sell “unless at a fire-sale price”.

Owner?

“Owning a home isn’t just for suckers...it is creating a class of fools for those who do buy, because so many Americans continue to think home ownership is the passport to the so-called American dream,” the story said, noting that headline news stories about rising interest rates and lack of supply were pushing people to make irrational decisions and, inevitably, finding themselves in the unenviable land of buyer’s remorse.

Last year, The New York Times ran a story titled, ‘Owning a Home Isn’t Always a Virtue’, in which the author said that when homeownership became a national goal in America in 1920, it was considered a virtue for every “good” citizen as it was thought to encourage planning, discipline, permanency and community spirit.

Aftermath

But that was until the aftermath of the subprime mortgage crisis in 2007/2008, which triggered a major world economic crisis.

It is one of the few stories I have come across encouraging renting over homeownership.

It acknowledged the reality that certainly, many of us have a basic drive to create their own habitats, but it also exalted what it called “important practical advantages of renting”.

The obvious advantage of renting is that a renter is more mobile, meaning he is more likely to accept jobs in another town or city.

And like the American housing bubble showed, it is not wise to put all one’s life savings into a single investment as millions of underwater borrowers would tell you.

Our case is quite different from the realities in America or other developed countries where homeownership is anything from 70 per cent, thanks to fairly low interest rates.

However, it seems that the debate about renting versus homeownership is inevitable. In a country like ours where about 90 per cent of the population are renters, logic dictates that special attention should be paid to the state of rental housing.

Rental policies

And it is encouraging that Shelter Afrique is spearheading efforts to have proper rental policies in Kenya and other African countries.

It is a pity that the Government’s housing policies have over the decades ignored rental housing.

Indeed, the current National Housing Policy has gone on and on talking about homeownership, but not even a mention of rental housing. The truth is we cannot all be homeowners.

But this argument should be a licence to start losing focus on homeownership. We cannot compare ourselves with America which has done enough, including establishing a secondary mortgage market, to make homeownership accessible even to ordinary citizens.

Our mortgage market is still rudimentary and it will take a long time for the majority of Kenyans to qualify for home loans. But we must develop it as a way of encouraging homeownership.

What we need are policies that encourage the development of affordable rental housing without losing sight of the homeownership quest by the majority of Kenyans.