I suppose I should not be surprised. More than 75% of voters in my poll said they really did believe that renting was the new American Dream. After all, San Francisco is a city of renters (and dreamers), and the poll results below are close to the distribution of residents who own compared to those who rent.

The question of how much we should incent renting versus owning is among the most supercharged political lightning rods in the Bay Area. Accordingly, I received a range of comments from a readers, friends and colleagues.

Dennis O’Brien sent me a message wondering whether the huge subsidies we have for homeownership (including, as he pointed out, the temporary $8k incentive for home purchase in the stimulus bill) distort the market.

Nathan Nayman sent me this link to a Rasmussen Reports poll showing that 59% of Americans think buying a home is the best investment a family can make.

I know that Rasmussen polls often reflect a more conservative point of view. But these poll numbers would be unsurprising to me even if they had come from a source known to lean toward the left. I still see a very strong desire to buy homes among the thousands of families that we serve at EARN.

I heard from many folks who work in real estate. Many of them believe the results of this poll reflect the incredible frustration many Bay Area residents feel over the difficulty of buying a home.

The range of comments I received, combined with the overwhelming poll results, reminded me of a Rorschach test. None of the polls I post on this blog have any real scientific value. But they are legitimate reflecting points about mood and perspective.

This conversation will continue to rage as the economy, and our collective view of our futures continue to evolve.The poll results could mean that we are clear that huge mistakes were made in the way we shaped homeownership opportunities through public policy and market structure. The poll results may reflect deep frustration and resignation over how difficult it is to buy homes here. These results could mean that one really frustrated reader voted again and again 300 times to make a point (see my previous point). I’m quite curious to see what you think these poll results mean.

It would be a huge impediment to upward mobility among working class people if we, as a nation, downgraded the importance of homeownership. Before I go any further, let me make a few things clear. I’m not one of those people who hate renting. I have lived in rental housing for virtually my entire life, and it has suited me just fine. I didn’t own a home until 5 years ago. I have nothing against renting, and believe it is the right choice for anyone who makes that choice. It’s also the right choice for anyone who can’t really afford to buy a home.

Affordable rental options must remain an important part of creating prosperity for low and moderate income workers. But I believe that homeownership is an especially powerful sparkpoint for Americans. Particularly for moderate income workers who do homeownership right - with fixed rate, long term financing, and a realistic plan to pay the full cost of ownership.

Achieving the dream of homeownership is the kind of life-changing experience that galvanizes people of modest means to continue driving toward successes that had previously seemed impossible - like graduating from college, or beginning to save for retirement for the first time ever. In the case of homeownership, there are also strong corollary benefits - it can lead to greater civic participation, and it seeds economic success for the children who live in homes owned by their parents.

Have you noticed the growing chorus around the nation, questioning whether homeownership should still be the cornerstone of the American Dream? It would be tragic if the institution of homeownership were the baby thrown out with the particularly fetid bathwater brewed by the mortgage mess.

Should renting really be the new American dream?

How the engine of homeownership ought to be built, and ought to run is one of our most important national conversations. I don’t propose to have the answers to these questions here. I’m just making a case to keep ownership as one of our cornerstones for prosperity. I certainly agree that we need to align the carrots and sticks of policy and market power properly, so we don’t drive people to make poor choices when it comes to buying homes.

But let’s not move all the carrots toward renting. For millions of Americans who have moved into the middle class, homeownership was the catalyst in a formula for creating multi-generational prosperity for families. Success begets success. And the success of homeownership led millions of these folks to make choices they would not have had they not owned homes.

When done properly (and it can be done well. EARN, and groups like us, have astonishingly low foreclosure rates among our clients - far smaller than the national average) homeownership helps grow aspiration. It can make other dreams come into focus for folks who buy homes - especially people experiencing upward mobility for the first time.

What do you think? Do you believe in this formula I’m arguing for, or do you think this is just alchemy? Make your voice heard by voting in the poll below. As usual, I promise to blog on the results!

Postsecondary education is one of the most effective vehicles to help low-income earners escape poverty and promote upward mobility. However, a gap continues to exist between the promise of higher education and the rate at which low-income individuals pursue college education. Only one-third of families in the bottom income quintile enroll in college and of those only a portion actually graduate.

A recent report by the Economic Mobility Project finds that many low-income students miss out on college simply because they do not have good information about how financial aid can significantly reduce the cost of tuition. The report, Promoting Economic Mobility by Increasing Post Secondary Education, identifies the factors that are essential to boosting college enrollment and graduation rates of low-income students. Additionally, it lays out a plan to help enhance economic mobility particularly for those students.

In California, tools are being developed to help more low-income students’ access higher education by bringing together two worlds - postsecondary education and nonprofit organizations that offer Individual Development Accounts (IDAs). This project is led by the University of Southern California School of Education which aims to help educational leaders identify ways to collaborate with nonprofit agencies to increase the usage of education IDAs.

You can download the recently published report here: IDA-PAYS: Examining the Potential of Education IDAs

IDA practioners and financial aid administrators may also be interested in: IDAs and Financial Aid: Understanding the Puzzle and Sharing Best Practices.

Also, if you are a higher education or IDA leader interested in offering IDAs or improving your current education IDA program, download: New Strategies in Delivering Education IDAs: Rethinking Program Design.

Last September I had the opportunity to participate in a working group tasked with identifying legislative and administrative strategies that encourage CalWORKs clients to take full advantage of the Earned Income Tax Credit (EITC) and asset building programs that can help move families toward long term self sufficiency. This working group is the outcome of AB 1078 (Lieber), an EARN sponsored bill which was enacted in October 2007.

Policy recommendations presented by stakeholders at this working group have been compiled in a recently released report prepared by California Department of Social Services and has been presented to the Governor and legislature.

Recommendations made at this working group include:

• Change the CalWORKs program rules regarding savings to allow clients to save more money and to allow the savings to be used for varying purposes.
• Connect and encourage CalWORKs clients to take advantage of VITA sites, which offer free tax preparation service and connect people to the Earned Income Tax Credit.
• Connect clients to organizations that provide asset-building programs like Individual Development Accounts and other matched savings programs.
• Encourage county agencies to provide money management training and seminars.
• Provide financial education resources in multiple languages for non-English speaking clients.

I was staring through the little TV screen on the elevator up to my office yesterday. Some of the words finally came into focus and gob smacked me. According to Deutsche Bank, half the homeowners in the US will owe more than their homes are worth by 2011.

If you don’t believe me, have a look here. Let’s put this into context. I did the math and we’re talking about 100 million Americans who will be underwater on their mortgages. Based on some projections from environmentalists, many of these folks may also be literally underwater shortly after their household balance sheets go into the toilet.

This is the kind of news that lends itself to some very creative interpretation. Some people read these kinds of numbers and immediately begin preparing to band together and live like Kevin Costner in Waterworld.

Can you see my mortgage?

I am more interested in what this will do to the way Americans re-evaluate their relationship with money. The report from Deutsche Bank states that a quarter of Americans already owe more on their homes than they are worth. I am certain that this is one of the reasons the savings rate in the US has skyrocketed from near 0% to about 6% in less than 6 months.

There is no disputing the national shift toward thrift. It is very hip, though I wonder if it’s just another trend. What’s our tipping point for a lasting cultural shift in how we save and spend? Many of my colleagues who work on helping people save believe we’ve already tipped. These folks have expressed their belief that the Great Recession has indelibly formed a new attitude about consumption. But I disagree. We Americans should never underestimate our attachment to stuff. In this country, unfortunately, we are still what we buy.

But I think our tipping point could arrive if half the nation’s mortgages sink underwater. It may come as a shock to some readers, but Americans used to be great savers - just as good as the Japanese and the Germans (but never as good as the Chinese, who have a 20%+ savings rate). We had double digit savings rates for years after the Great Depression. But savings gradually petered out as we invented new ways to get cars, homes, appliances and just about anything else. In particular, I think being able to shake money out of your home like a piggy bank sent the savings rate below zero.

What do you think our tipping point will be? What will it take to make us a nation that saves - not just in an emergency, but across time? I’d love to see your comments on this below.

For all our sakes, here’s hoping Deutsche Bank is wrong about 2011. In addition to the obvious and deep economic ramifications, it would be really unfortunate if Waterworld were given a second life.