Benefits of Homeownership

Almost two-thirds of all U.S. households live in owner-occupied homes. Homeownership gives one the opportunity to accrue equity off increases in the value of their property. And for lower income households, a home is often the largest and only asset they have. Homeownership source of wealth There are numerous studies that support the social and economic benefits of homeownership. These benefits have resulted in improved neighborhoods, stable families, and an improved quality of life for these homeowners. The reports highlight: Education:

  • Greater School Achievement: One study found that children of homeowners have cognitive outcomes that are 9% higher in math and 7% higher in reading.[i]
  • Increased Graduation Rates: Homeownership can increase the rate of high school graduation by as much as 10% for low income families.[ii]
  • Students from low- and middle-income families are much more likely to enroll in college when their families experienced gains in housing wealth.[iii]
  • Greater Lifetime Achievement: Furthermore, children of homeowners have a 6% greater likelihood of completing a post-secondary education and are 9% less likely to receive welfare benefits between ages 24 and 28. [iv]
  • Students from low- and middle income families were more likely to select higher-quality schools and were more likely to graduate with a four-year degree when their families experienced gains in housing wealth. [v]

Crime:

  • Drop in crime: A 1% rise in homeownership has been found to lead to a 1.3%-1.5% drop in property crimes and a 1%-1.1% drop in violent crimes according to a nationwide study[vi]
  • Homeowners are also more likely to intervene when they observe low-level criminal behavior in their neighborhood. [vii]

Property Values: • A study of a dispersed Denver program found about a 2% increase in property values between 1000 and 2000 feet from the site of development. [viii] • Another study of Nehemiah housing developments found that property values in areas with new homes reversed a pre-construction decline and rose by about 3.8%. [ix] • Property Taxes: Annual Property Tax generated for the District from all of MANNA homes produced since 1982 (1,000 plus units) is estimated at $1.7 million plus. (stat from 2011) Political Participation:

  • Homeowners are 10% more likely to know their U.S. representative. [x]
  • Homeowners are 9% more likely to know  school board head. [xi]
  • Homeowners are 15% more likely to vote in local elections. [xii]
  • Homeowners are 6% more likely to work to solve local problems. [xiii]
  • A 2017 study in Washington state found that immigrant homeowners had higher levels of belief in community engagement, empowerment, and involvement than renters. [xiv]

Equity Accumulation

  • A 2004 HUD report found that homeowner equity accounted for an annual wealth appreciation of $1,712 for low income, minority households. [xv]
  • A 2003 study found that housing wealth accounted for 77% of all low income household’s wealth. [xvi]
  • Even at the lowest point of home values during the Great Recession, homeowners still had on average forty times the wealth of renters.
  • Rise in property value for all MANNA for-sale homes produced since 1982 (over 700 homes): Estimated at $162 million plus. [xvii]
  • Median equity gain per Manna property: $171,343. [xvii]
  • That accumulation doesn’t stop at one generation: Another study found that every 1 percent increase in home values represented a 1.5 percent decrease in income for the children of renters, but a 0.9 percent increase in income for the children of homeowners. [xviii]

Racial Wealth Gap Wealth gap and homeownership rates •If public policy successfully eliminated racial disparities in homeownership rates, so that Blacks and Latinos were as likely as White households to own their homes, median Black wealth would grow $32,113 and the wealth gap between Black and White households would shrink 31 percent. Median Latino wealth would grow $29,213 and the wealth gap with White households would shrink 28 percent. [xix] Wealth gap and homeownership • If public policy successfully equalized the return on homeownership, so that Blacks and Latinos saw the same financial gains as Whites as a result of being homeowners, median Black wealth would grow $17,113 and the wealth gap between Black and White households would shrink 16 percent. Median Latino wealth would grow $41,652 and the wealth gap with White households would shrink 41 percent. [xix]   References


[i] Haurin, Donald R., Toby L. Parcel, and R. Jean Haurin. October 2001. “The Impact of Homeownership on Child Outcomes.” Low Income Homeownership Working Paper Series. Joint Center for Housing Studies, Harvard University.
[ii] Aaronson, Daniel. 2000. “A Note on the Benefits of Homeownership.” Journal of Urban Economics 47(3): 356-369.
[iii] Urahn, Currier, Wechsler, Wilson, Colbert. 2011. “Housing Wealth and Higher Education: Building a Foundation for Economic Mobility” Pew Charitable Trusts Economic Mobility Project.
[iv] Aaronson, Daniel. 2000. “A Note on the Benefits of Homeownership.” Journal of Urban Economics 47(3): 356-369.
[v] Urahn, Currier, Wechsler, Wilson, Colbert. 2011. “Housing Wealth and Higher Education: Building a Foundation for Economic Mobility” Pew Charitable Trusts Economic Mobility Project.
[vi] Ni, Jinlan and Christopher Decker. 2009 “The Impact of Homeownership on Criminal Activity: Empirical Evidence from United States’ County Level Data.” Economics & Business Journal: Inquiries &  Perspectives. 2(1): 17-37. [vii] Lindblad, Mark R, Kim R Manturuk, and Roberto G Quercia. 2013. “Sense of community and informal social control among lower income households: the role of homeownership and collective efficacy in reducing subjective neighborhood crime and disorder.” American Journal Of Community Psychology 51, no. 1-2: 123-139.
[viii] Galster, George, Anna M. Santiago, Robin E. Smith, and Peter A. Tatian. 1999. “Assessing  Property Value Impacts of Dispersed Housing Subsidy Programs.” Washington, DC: U.S. Department of Housing and  Urban Development.
[ix] Ellen, Ingrid Gould, Scott Susin, Amy Ellen Schwartz and Michael Schill. 2001. “Do Homeownership Programs Increase Property Value in Low Income Neighborhoods?” Low Income Homeownership Working Paper      Series. Joint Center for Housing Studies, Harvard University.
[x] DiPasquale, D. and E. Glaeser. 1999. “Incentives and Social Capital: Are Homeowners Better Citizens?” Journal of Urban Economics 45 (2): 354–84
[xi] DiPasquale, D. and E. Glaeser. 1999. “Incentives and Social Capital: Are Homeowners Better Citizens?” Journal of Urban Economics 45 (2): 354–84.
[xii] DiPasquale, D. and E. Glaeser. 1999. “Incentives and Social Capital: Are Homeowners Better Citizens?” Journal   of Urban Economics 45 (2): 354–84.
[xiii] DiPasquale, D. and E. Glaeser. 1999. “Incentives and Social Capital: Are Homeowners Better Citizens?” Journal  of Urban Economics 45 (2): 354–84. [xiv] Mireles, Gilbert F. “The Effects of Homeownership on Civic Participation among Immigrant Farmworkers in Washington State.” Rural Sociology 82, no. 1 (March 2017): 129.
[xv] Boehm, Thomas P. and Alan Schlottman. 2004. “Wealth Accumulation and Homeownership: Evidence for Low- Income Households” Washington, DC: Office of Policy Development and Research, US Department of Housing and Urban Development.
[xvi] Di, Zhu Xiao. 2003. “Housing Wealth and Household Wealth in the United States.” Joint Center for Housing  Studies of Harvard University. Working Paper. [xvii] Silver, Josh. 2015. “The Financial Benefits of Homeownership: An Evaluation of  a Nonprofit Model.” MANNA, Inc. [xviii] Cooper, D., and Luengo-Prado, M. “House Price Growth When Children Are Teenagers: A Path to Higher Earnings?” Federal Reserve Bank of Boston Working Papers, 13-14. 2014. [xix] ”The Racial Wealth Gap: Why Policy Matters.” 2015. Demos and The Institute on Assets and Social Policy (IASP).

 

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>