The plane was ready to take off, and I could not help noticing the woman sitting next to me. She looked like the national real estate agent of the year. Her iridescent baby blue and muted magenta tweed outfit clung to a body that survived on Special-K alone.
“What do you do?” she asked in a voice that could marshal the hormones of an octogenarian.
“I’m an economist,” I flustered.
“Talk to me in economics,” she entreated.
“Nationally, housing is rebounding,” I said breathlessly. “In fact,” I said with surprising authority, “the median asking price for rental units (apartments and houses) is at an all-time high in current dollars at $724 per month.
“In contrast,” I proclaimed, “the median asking price for owner-occupied houses and condos ($137,700) has stabilized about 30 percent below the peak of 2007.”
“You’re telling me the cost of owner occupancy is falling relative to renting? That would be good for homes sales,” she sighed.
“Well,” I flustered, “maybe. There is a difference between acquisition cost and price. The price is only part of the total cost. With increased paper work and delaying bureaucracy, the cost of homeownership is rising more than its price.”
Her intense eyes told me she understood better than I did the difference between cost and price. I proceeded:
“Homeowner vacancy rates in the Midwest and in the nation are about the same (below 2 percent). However, vacancy rates for rental housing are higher in the Midwest (9.3 percent) compared to the nation (8.7).
“Basically, Midwestern housing markets are different from those of the rest of the nation,” I continued.
“Midwestern homeownership rates (that’s the percent of occupied dwellings lived in by their owners) were at 70 percent at the close of 2012 while for the nation that figure was 65 percent. To put it differently, 30 percent of the occupied housing units we see in the Midwest are rentals whereas its 35 percent nationally. No other region of the country is more given to homeownership than is the Midwest.”
“That might be a fascinating factoid,” she purred (or was it a growl?). “Tell me,” her voice enticing my attention, “is that because we are somehow different from people elsewhere in our preferences or in our circumstances?”
“Wow,” I thought to myself, “this is a lady with a sharp mind.”
Aloud I said, “I don’t think we are different in our preferences. We probably want the same things as other Americans, but our circumstances are different. We have an older population than you’ll find in other regions of the country. Homeownership rates increase with age.
“Under age 35, the homeownership rate nationally is 37 percent. This rises to 60 percent for those 35 to 44, and to 71 percent in the next decade (45 to 54 years of age). For those 55 to 64, homeownership characterizes 78 percent of households. In that oldest group (65 plus), it reaches 81 percent.
“Since Hoosiers and other Midwesterners are by-and-large older than other Americans, we have higher homeownership rates,” I concluded.
Suddenly a hand touched my shoulder. “Please return your seat to its original upright position,” a voice said.
I looked about. The seat next to mine was empty. Was it a fantasy or had she left me for a more interesting companion?