Paul's Internet Landfill/ 2025/ A Home is Not a House

A Home is Not a House

I have no doubt written about this before, but (lucky you) I'm writing it again.

In my view there are two beliefs about housing that are incredibly harmful:

I am not arguing that housing has not been a form of building intergenerational wealth to this point. People argue that black people in the USA remained poor partially because redlining and racist aspects of the GI Bill put up barriers to home ownership. (Here's a pretty thorough explainer ) But just because housing has historically been a form of generational wealth does not mean that it should continue being so. If the purpose of home ownership is building intergenerational wealth then it is immoral for home prices to ever go down, which mean all the tiresome NIMBY complaints about property values are legitimate, which means we can never build infill housing for fear of making some overhoused boomer's house lose property value. I reject this argument wholeheartedly. People are not entitled to rising home prices just because home ownership is their investment vehicle of choice. Housing as a way to give people places to live is more important.

People rarely talk about single-family home supremacy explictly. Instead they talk about the crisis of young people not being able to "own a home," and then they decry tiny "shoebox condos" and lament that young people will never have a place with a yard, because raising children requires suburban backyards. In a similar way, we think of small houses or townhouses as "starter homes" or "investment properties," as opposed to thinking of them as home ownership. The platonic ideal of "home ownership" in our heads is some detached single-family home with too many square feet and too little community in some garbage car-centric suburb built on a greenfield. As long as we hold that platonic ideal in our heads, we will continue building garbage car-centric suburbs in greenfields, because how dare we deny millennials and GenZ folks the same advantages of "home ownership" that we enjoyed? (Well, that some of us enjoyed, anyways.)

This is all insane. If we insist on car-centric suburbs built in greenfields, we will pave over a lot of good farmland, because we settlers settle on the best farmland first. But even if we don't care about farmland, suburbs are inefficient: in terms of tax revenue, in terms of municipal services, in terms of keeping extended families close together. They are (intentionally) far from everything. They are not safe (domestic abuse is a form of unsafety), and in my opinion they are not very good at fostering any kind of community beyond NIMBYism. (Yes, I said it and I stand by it. Compare community in rural areas to community in any suburb.) I understand that people have dreams of "their own space" where they get autonomy, but although the suburbs sell this dream they don't live up to them.

I am not a fan of every form of urban density. I have phobias about roaches and bedbugs and never want to live with them as housemates again. It is not great to have stompy neighbours living overhead. A smaller home can be more cramped than a 3000 square foot McMansion. But don't pretend that suburban life is great either. Everything is tradeoffs.

Having said that, when you (implicitly or explicitly) disparage perfectly good housing types (condos, townhouses, midrises, granny flats) as substandard then you are doing great harm. In my view the point of the housing crisis is that housing has become unaffordable and unstable. Any housing that is safe, affordable and stable is good housing in my view. That can take many different forms. I happen to think the tiny cabins at A Better Tent City are fine housing, although the neighbours can be stressful. I think that SROs (Single Room Occupancy) units that consist of a room and then some shared kitchen and bathroom facilities can work fine if common areas are managed well. Even shoebox condos can be okay, even though they are very expensive given mortgages and condo fees.

Supposedly, many people in Europe are lifelong renters. They have flats in buildings above retail stores, and they live in those flats for years and years. Such housing ought to count as "real" housing. But I think we will never have such living arrangements in Canada -- if nothing else, rents will never be stable for any apartment built after 2018. That brings me to my next point, which deserves its own subheading.

Mortgages Are Rent Control

In my view the real secret to home ownership is stability. In principle, when you own a home then it is yours and you cannot be evicted from it (easily). You get to decide how to decorate your home and how to repair it. In practice, there are muncipal taxes and property standards and Home Owner Associations to deal with, but there is little question that the millenials bleating about "never being able to own a home" is partially a complaint about stability.

One reason home ownership is stable is because you get to live in your house even before you have paid it off. The bank is your landlord and you get to pay your mortgage as a form of rent, in dribs and drabs for decades and decades.

A mortgage is a form of stability because you lock in a mortgage rate, and thus know what your "rent" to the bank will be for multiple years. You pay that amount every month and the bank is happy until it is time to refinance, at which point your monthly rent might go up or might go down.

Contrast that to renter life in Ontario properties built after 2018. These are not subject to any form of rent control. The landlord can increase the rent arbitrarily from year to year, and if you don't like it you are free to find another place to live. Renter life is inherently unstable.

Rental units built before 2018 do have some rent control. Rent is not completely predictable from year to year, but there are maximal rent increases, and if landlords want to charge more they have to apply for above guideline rental increases. That is not that different from home ownership under a mortgage, except that in a rent-controlled unit the landlord has a strong incentive to move you out and get a higher-paying new tenant, and a bank doesn't have that incentive with its mortgage holder.

For a long time I was against rent control because I believed it stifled construction. Now I don't know what to think. I do think it is unfair that home "owners" renting from their bank get a better deal than renters who rent from regular landlords, especially since the latter are more likely to be in financially precarious situations. Add to that the tax breaks that homeowners enjoy, and the situation seems even more unfair.