One commonly held view among housing practitioners and policymakers is that building homeownership is essential to building strong communities. Home equity has historically helped build wealth, and homeowners are stabilizing forces, who are more likely to invest in home maintenance. However, our experience building MVAs suggests that rental markets can also be sources of opportunity and strength, especially when they are near job centers, transportation hubs, or other amenities.
The MVA just completed in New Orleans (our 2nd since 2013) provides a case worth considering. On average, 49% of homes in NOLA are owner occupied, yet, within markets the share of owners varies from 29% to 73%.
The table below shows the average market indicator in each MVA cluster. As expected, the strongest market has a higher owner occupancy rate than the weakest market (66% vs 49%). However the next two strongest markets (B & C) are predominantly renter-occupied. And elsewhere, the trend is more complex, particularly in NOLA’s middle markets.
The E1 and E2 markets are particularly interesting. Both share similar sales prices ($86k vs $84k), yet they have very different rates of owner occupancy. Just 33% of homes are owner occupied in E1 markets while 73% are owner occupied in E2 markets.
Tenure data, in combination with other key market indicators, are a useful tool for understanding markets and crafting intervention strategies. For example, E1 markets, which sit near job centers and have modest transportation access, are of particular interest to officials focused on preserving affordability in high-opportunity areas. There are a number of well-established tools for preserving affordability in rental markets which could be deployed in these areas.
The ability to differentiate between markets that are primarily rental versus owner occupied can serve as an additional tool to allow practitioners and officials to better tailor their particular market intervention strategies.