The housing theory of everything

Skyscrapers are underrated. That’s at least one of the conclusions that I draw from a great recent article on Works in progress: the housing theory of everything.

Its main thesis is quite nicely summarized in one of the last paragraphs:

Many young people have had to delay forming families and often take poorly paid, insecure jobs that can barely cover rent and living costs as the price for living in culturally attractive cities. They see opportunity as limited and growth as barely perceptible. Meanwhile, older generations sit on housing property worth many times what they paid and, stuck in a zero-sum mindset, often prioritise the protection of their own neighbourhoods over the need to build more homes. Can you blame young people who resent older people, and the West’s economic system itself, when this is what it offers them?

The housing theory of everything – Works in progress

Next to inequality and conflict between generations, the article makes good arguments to link extremely high housing prices in Western cities with issues like fertility, social mobility and even climate change and obesity.

One of the most interesting arguments is that there is a very strong correlation between ‘housing equity’ (distribution of home ownership) with inequality. When looking at inequality statistics between different countries, in many cases what you’re really looking at is the distribution of who owns houses.

Considering the role of housing equity, financial assets, non-housing real assets, and non-housing debt, we show that cross-national variation in wealth inequality and concentration is centrally determined by the distribution of housing equity.

The Wealth Inequality of Nations, American Sociological Review

Living in Belgium, financially one of the more equal countries in Europe and also a country where relatively many people own their own homes, this analysis rings true.

An important consequence of this insight is that it provides a clear way of improving the situation: keep real estate prices and rents at a reasonable level by increasing density of cities, and make it possible to start a family while living in a city.

Header photo by Jezael Melgoza on Unsplash