Those of us who work in housing and housing policy know how complicated housing tenure can be. The most common forms of tenure, which describes the legal status under which people have the right to occupy their accommodation, are homeownership (both owned outright and mortgaged) and renting (which includes public and privately rented housing). Even something as seemingly straightforward as owning a house is not that simple. Depending on your mortgage, local and state laws, your cultural norms, whether your property is governed by a homeowners association, and the type of structure it is, the basic legal, economic, and even emotional nature of the relationship between a household and its house can be very different.
These subtle differences in housing tenure for homeowners become even bigger when one considers renting, condominiums, residential hotels, community land trusts (CLTs), etc. Despite its image as a “home owning” nation, the United States has an exceptionally diverse array of tenures, so we took a deeper look at the issue to estimate how many Americans live in different types of tenure, what existing housing tenures are supported and protected, which are risky, and what all this means for policy and politics.
The first step for us was moving beyond a one-dimensional view of tenure, which sees renting on one end, owning on the other end, and various hybrids in the middle. Not only does this view exacerbate tensions between housing advocates, it also misunderstands tenure. Instead of this one-dimensional view, we argue that tenure should be thought of along two dimensions: wealth-building and degree of control. Think of these as the financial and political aspects of living in a housing unit, respectively: how much wealth you could gain or lose as a result of living there, and the extent to which you get to decide whether and how to renovate, refinance, sublet, sell, move out, or make major decisions about how and if you live in your home.
One-dimensional views assume wealth-building and degree of control go together, and sometimes they do. An apartment renter will lack certain controls over how the building is run, and will certainly not benefit financially over the long term. By contrast, a single-family homeowner, especially one that is not part of a homeowners’ association, will have broad latitude over most decisions and in turn accepts the risks and benefits of the home’s changing value.
But in other cases, wealth-building and degree of control are decoupled rather than linked: for instance, the owner of a manufactured home in a typical manufactured housing community will have control over their home but will likely not benefit a great deal from it financially because they don’t own the land it rests on. Many nonprofit and alternative housing tenure facilitators offer what we call the “third way” (mutual housing associations, limited-equity co-ops, community land trusts), which present different mixes of control and wealth-building potential. Different legal arrangements in different cities and states—like rent-control and anti-eviction rules—change this mix.
To make this clearer, we developed a “map” of housing tenures, above. While not fully comprehensive, it helps us see that the rent/own dichotomy doesn’t hold water. The real picture is more complex. But this map also allows us to show two important things:
First, we can analyze just how prevalent these different types of housing are. Despite the idea that we are a nation of homeowners, our study reveals that only 49 percent of American homes are single-family ownership, and the number drops to 41 percent when we exclude people in housing associations, which significantly impacts one’s control (and at times, one’s wealth-building potential). In order to talk about rental housing, including affordable or below-market rate housing, we need to be more specific. We estimate that 19 percent of Americans live in market-rate rentals, 2.6 percent in subsidized rentals, and 1.6 percent as renters in Accessory Dwelling Units (ADU) or owner-occupied multi-family homes. Below market-rate condos, CLT units, single-family homes with ADUs, owner-occupied units in multifamily buildings, co-ops (including limited equity), and cohousing units make up a combined 2.2 percent of the housing stock in the United States.
The full list shows a remarkable diversity of tenures that match our large and remarkably diverse nation, but the real value of this analysis is that it enables us to look at which tenures are subsidized and which are protected. They are often related, but they each represent two different dimensions of public policy. We subsidize single-family homeownership nationally, but don’t necessarily offer a lot of protection against bad loans or other dangers. We have numerous protective tenures like CLTs, but they rarely receive major subsidy. Some tenures like subsidized rentals get both subsidy and protection, while others like informal housing arrangements or an owned home with ground rent (like in a manufactured or mobile home) generally get neither.
By analyzing this new two-dimensional tenure map against both subsidy and levels of protection, we can start to see more clearly the relationship between where housing policy puts its money, its legal protections, and which types of tenures are favored.
Our numbers are good estimates at best, and our map of protection and risk is only generalized for the U.S. and may look different locally. But even this very general map and analysis of tenure helps us push beyond the “renting vs. owning” debate, as well as focus on alternative models. It shows us the diverse reality of American housing tenure, as it exists today, and so rather than focusing on promoting one type of tenure, the question has to become how to support and protect all American homes in their full diversity. What is a good tenure for one household may not work for another. What is a protected tenure in one place may be risky in another. One form of tenure may work for a household at one point in life, but not another.
Rethinking tenure in this way helps us envision changes to our vast, complex American housing system as a whole to ensure that all Americans, regardless of what type of housing unit or what type of community they live in, have a safe and secure place to live. How we get there in terms of policy and politics is a question we will address in an upcoming post. In the meantime, we welcome your thoughts.
For the next layer of complexity, this could be mapped with a Z coordinate value indicating population (or ‘housing units’) falling into various tenure types, although definition of types would need to be fuzzy by nature and I see you’ve started to look at that kind of data in the following paragraph.
I presume what you would see graphing like this is a Z ridge along the 45 degree line currently defined as the ‘trade-off line’.
It may be useful to redraft the graph with the 0,0 point in the center, this is an often-used visual style for graphs where you’d like the viewer to understand the concept posed by your explicit ‘trade-off line’.
Great overview for understanding housing tenure! There are a few items to expand this picture. For example, any ownership structure needs to take into consideration local real estate markets when determining wealth building potential. There has been, and will continue to be, many low-cost and non-appreciating submarkets in the mid-west, south, rural and urban areas. Another form of tenure is lease-purchase in its many forms (and there are many) which combine aspects of the protections and wealth building of both renting and ownership. Finally, with sales-restrictions placed on mortgages for some ownership models, the control aspects often mimic the rental side of the equation.
Thanks Sam. This is really helpful.