Urban Policy Brief Examines Advantages of Homeownership
Homeownership is such a hallowed part of the American Dream that even housing researchers seldom question its presumed benefits. HUD USER's second Urban Policy Brief reviews the empirical evidence concerning the social, economic, and emotional impacts of home-ownership, particularly for lower income Americans.
"Homeownership and Its Benefits" finds that "although research on some key points remains inconclusive, the preponderance of existing scholarship confirms the validity of many of the benefits popularly attributed to homeownership." These include claims that homeownership:
Increases personal wealth. Statistics show that equity in a home is the largest single source of wealth for most families and marks an increasingly important economic divide in American society. Median net wealth for homeowners exceeds $78,400, compared to $2,300 for renters. More than 60 percent of homeowners' wealth is in the form of home equity.
Enhances personal well-being. It is often asserted that homeownership promotes personal fulfillment in a number of ways. Its importance as a symbol of social status is thought to increase the homeowner's self-esteem and overall satisfaction; the greater privacy it provides may allow the owner to feel a greater sense of control over his or her life. To date, however, the research literature has yielded very little empirical evidence that either confirms or refutes psychological benefits from homeowning.
Promotes stronger neighborhoods. Like research on presumed psychological benefits, the problems inherent in developing quantifiable measures and in distinguishing housing tenure from other possible explanatory factors have consistently weakened studies of homeownership's social benefits. However, there is a growing body of evidence that homeowners move less often than renters and are more likely to maintain their property and to participate in neighborhood-based social and political activities.
Generates economic growth. Housing is a large and vital sector of the national economy. Building 1,000 single-family homes creates almost 2,100 full-time jobs--home construction and related industries employ approximately 6 million Americans. Investment in residential property accounts for more than 4 percent of the Nation's gross domestic product (GDP).
HUD USER Urban Policy Briefs offer the casual reader an informative overview of important topics in housing and urban development, while providing citations to seminal research for readers who wish to explore a subject in greater depth. Single copies of Urban Policy Brief No. 2: Homeownership and Its Benefits are free from HUD USER. Please contact HUD USER to obtain print copies.
