In March, California tied Rhode Island for third highest unemployment, at 12.6 percent. According to the L.A. Times, "the Employment Development Department estimates that about 100,000 Californians will have exhausted their benefits by this weekend," each after spending as many as 99 weeks on the dole. Now look at foreclosures, where, according to the latest data from RealtyTrac, "California accounted for almost a quarter of the foreclosure filings in the quarter..."
California is filled with people who jumped on board the homeownership train when they couldn't afford it. To make matters worse, they're tied to their location because they own instead of renting.
The reckless push by the last three presidential administrations to encourage homeownership among those who lack the means for it has placed an anchor on peoples' legs, just as the flood of unemployment is rising. (Look at this and try not to smack your forehead in disgust.) When those homeowners fail to pay their mortgages, banks are forced to foreclose, often at a great loss. This means that fewer loans can be made to small businesses that need the capital. This means that fewer small businesses open, and those that already exist tighten the budget because the margin for error is slimmer. (Our editorial Friday neatly summarizes the political push to spread homeownership.)
So long, engine for economic growth.
The bipartisan decision to stigmatize renters was always about making people feel more invested in their communities. Instead of improving the situation, it has become a multiplier in the recession. If a renter in Detroit lost his job at General Motors, he could at least move to Alabama and seek work at a Toyota factory.
But a homeowner, like it or not, "is invested in his community," right up to the moment it hits the ocean floor.