Buying a home means accepting a large dose of undiversified risk, much of it stemming from factors outside of the purchased parcel and out of the homeowner’s personal control. In this article, forthcoming in the Northwestern University Law Review, Chicago's Lee Fennell presents a new tenure form, Homeownership 2.0 (“H2.0”), that reconfigures the default homeownership bundle. Central to H2.0 is a distinction between parcel-specific influences on home values, like remodeling and maintenance choices (“onsite factors”), and influences on home values that emanate from beyond the four corners of the parcel, such as neighborhood changes and larger housing market trends (“offsite factors”). Fennell argues that investment in onsite factors is essential to homeownership, but that requiring homebuyers to invest in offsite factors as a matter of course is no more sensible than forcing them to invest in some other random, localized venture with variable returns. Indeed, scholars and innovators have already explored a variety of ways to slice, dice, hedge, and trade housing market risk. Using the H2.0 proposal as a focal point for analysis, Lee’s piece steps back to examine how a reduced-risk version of homeownership would fit together with property theory, human cognition, and the social dynamics of neighborhoods and metropolitan areas.
Rich Schragger of UVA School of Law will debate Lee’s paper next week on the Faculty Blog. We hope you’ll join us!