Rent vs. buy? Perhaps we need another option…

As a group of mostly millennials, it is fair to say that a majority of us either wants to buy a house now, or plans to do so when we have the ability. The reality though, given our conflicting desire to buy a home but also live in dense, highly amenitized neighborhoods, is that we may have to make a substantial tradeoff or delay purchasing for a while. While this dilemma is a repeated point of friction for me, a passage in “The Carbon Efficient City” brought it back for me and set it in a new light.

In the passage, AP quotes Buckminster Fuller with saying, “to change something, build a new model and make the existing obsolete.” With this idea as a catalyst, it is interesting to look at an interrelated system of conflict within our cities, and what a “new model” might look like. Our current existing housing model can be credited with the following:

  • Apartments and other rental housing are often not built with lifecycle costs in mind.
  • Apartments are tailored to the demands in the market and what they can make a return on.
  • Homeowners tend to care more about the quality of their homes than renters.
  • Millennials are postponing buying houses, but want to.
  • People want the flexibility of renting with the security and capital appreciation of owning.

In the context of sustainability, one of the major factors here is the idea of lifecycle costs. One of the major hurdles in the adoption of more environmentally friendly technology is the market acceptance of the technology as being accretive to their business model. This starts with the customer, true, but it also maters the type of customer and their capital and emotional investment in the building. Unfortunately, apartment renters do not often place enough value on building quality and sustainability to make it viable for the developer to build. This is not the case for owners.

With this dilemma in mind, how could we “build a new model,” that would both give people the ownership they want, and would help drive the market towards superior buildings that incorporate more sustainable features? Is it possible to create an ownership model that simultaneously gives people flexibility and ownership, making their buildings and communities better, more sustainable places?

Here are some ideas to think about:

  • Give renters an avenue to invest in the building they live in, earning a return commiserate with, say, a limited partner investor?
  • Revisit the idea of cooperatives, but exchange individual debt with a collective financing model that would make it easier for residents to buy into and sell out of the building, while giving them many of the perks and responsibilities of ownership?
  • Reduce the liability tail of condos that are built with innovative/green technology?
  • Your idea?
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