Could Renting Be the New American Dream?

Renting and returning to urban living -- where energy costs are lower -- could be in the offing.

Classified ad for an apartment rental
In the 1948 film, Mr. Blandings Builds His Dream House, Cary Grant and Myrna Loy play two naive city dwellers who have had enough of family living in the city and decide to move to the country. Problems ensue as the apartment-dwelling city slickers try to become homeowners. If the movie were remade today, its premise wouldn’t work: There are hardly any middle-class families living in urban apartments. But some think the situation could change.

Homeownership boomed during the postwar period as millions of Americans moved to the suburbs to live in a home with a yard and two-car garage. Thanks to subsidies, such as the home mortgage deduction, and cheap gas, the march to the suburbs has continued unabated for nearly 50 years. In the spring of 2004, the homeownership rate reached its highest level ever at 69.2 percent, according to the U.S. Census Bureau. Today, post-recession, that rate has dropped to 66.9 percent and could drop further as the dream of living in a home far from the city looks less affordable or desirable.

In September, Time magazine examined what a post-homeownership America might look like, and speculated that renting and returning to urban living -- where energy costs are lower -- could be in the offing. “Cities aren’t for everyone,” the magazine reported. “But maybe they would be for more people if we didn’t all feel as though at some point we were supposed to move to the suburbs and buy a house.”

If you’ve visited a large city in the past decade or so, the growth in apartment living is nothing new. From Boston, New York City and Washington, D.C., to Chicago, Salt Lake City and San Francisco, skylines have changed as new (and mostly expensive) apartment towers have risen. Typically the new wave of apartment dwellers includes youthful singles and couples, as well as returning baby boomers, who have left their empty nests in the suburbs.

Missing from the mix is a crucial demographic: the middle-class family. In European cities, apartment living for families is normal and widely available. A couple North American cities -- New York City and Vancouver, Wash. -- have reported a recent uptick in families seeking to rent or buy apartments. But most American urban centers have little to offer the middle-class family in the way of affordable and roomy apartment living, and it’s likely to stay that way, according to architect and University of Maryland Professor Emeritus Roger Lewis.

Lewis, who is also a columnist for The Washington Post, says two challenges stand in the way of the return of families to cities: the lack of good schools in city centers and the high cost of building multibedroom apartments. “The problem is large and it’s nationwide,” he says. Simply promoting family-friendly development in cities won’t work. What’s needed are subsidies to expand the inventory of large-sized rental apartments that are comparable in cost to an average suburban home and stronger public-sector interest in developing urban communities that support family life, Lewis says.

The market for family-sized apartments in cities may never grow large, but it may take some nudges from government to make it grow at all.

Andy Kim is a former GOVERNING staff writer.