The Positive Effects of Home Ownership

“For millions of our citizens, the American Dream starts with owning a home. Home ownership gives people a sense of pride and independence and confidence for the future. When you work hard, like you've done, and there are good policies coming out of our nation's capital we're creating a home -- an ownership society in this country, where more Americans than ever will be able to open up their door where they live and say, welcome to my house, welcome to my piece of property.”

According to a survey by the Federal National Mortgage Corporation (Fannie Mae), of 1,521 surveyed, four out of five reported that they would rather own their own home than take a better job in a city where they could only afford to rent. Two out of three said that they would be willing to work a second job if that was the only way they could afford to get their own home. Four out of five said they would rather own a home and have a long commute from work than rent a place nearby. The latest government statistics show that the U.S. home ownership rate reached a record 69.2 percent in the second quarter of 2004. The number of homeowners in the United States reached 73.4 million, the most ever. And for the first time ever, 50.6% of minority Americans own their own homes.

Home Ownership and Satisfaction
Pride of ownership is probably the single greatest benefit of owning a home. According to the Joint Center for Housing Studies of Harvard University, home ownership can contribute to life satisfaction in several ways. Buying a home continues to be a goal for many Americans and in doing so, symbolizes that the owner has achieved a certain economic status. Secondly, many home owners derive self-satisfaction from maintaining and improving their property whereas renters are less likely to do so. Lastly, home owners have greater latitude with improvements and customization, and are consequently more successful than renters at creating an environment which closely matches their personality and lifestyle. According to The Social Benefits of Homeownership: Empirical Evidence from National Surveys written by Peter Rossi and Eleanor Weber, one of the claimed advantages of home ownership is the heightened sense of well-being. The results of their survey seem to support these claims that homeowners have a higher sense of self-satisfaction than renters, are more likely to believe in their capabilities and that their lives would turn out to their liking. David Van Meter, Pharmaceutical Sales Representative for Pfizer, concurs. As an initial renter upon relocating to Leesburg, Maryland, David found it difficult to set up an efficient home office in the rented townhouse due to limited modifications he could make and this negatively affected his sales. Upon purchasing his new home, David was able to improve his work environment by customizing a home office and immediately become more productive.

Home Ownership and Health
According to the 1998 Scottish study in the Journal of Epidemiology and Community Health, researchers S. McIntyre and A. Ellaway concluded that, after controlling factors such as age, sex, income and self-esteem, homeowners scored higher on health surveys and key health indicators. The Social Benefits of Homeownership analyzed data from the National Study of Family Health and found that homeowners had a higher percentage of positive self-assessments of physical health and scored lower on the scale of depression than renters. The Joint Center for Housing Studies of Harvard University concluded that home ownership contributed to both physical and psychological health as homeowners have additional assets to pay for healthcare and compared to renters, homeowners have the additional security of tenure which may result in a less stressful life.

Home Ownership and Neighborhood Stability/Social Involvement
According to the Home Ownership Alliance Public Opinion Poll conducted in June, 2004 participants surveyed responded that homeowners were more connected to the community and more likely to be actively involved in community affairs. The Joint Center for Housing Studies at Harvard University echoes these sentiments noting that homeowners typically have higher levels of participation in local voluntary organizations and political activities in order to protect their economic and emotional investment in their neighborhood. According to The White House Homeownership Policy Book, homeowners work to maintain the value of their investment, which translates into a greater concern for neighborhoods and surrounding communities. A family that owns its home is more likely to upgrade the property, to take pride in its neighborhood, and to feel invested in the community. When citizens become homeowners, they become stakeholders as well. By increasing the ranks of stakeholders, communities not only enjoy increased stability but also benefit from a new spirit of revitalization. A study by Daniel Aronson entitled A Note on the Benefits of Homeownership further concluded that homeowners have a large financial stake in their community and therefore may invest more in neighborhood and school capital. While landlords recoup any community specific investments made by renters, homeowners are able to internalize the future returns to these investments because they accrue as increases in the home’s value.

Home Ownership and School Performance
According to the Home Ownership Alliance Public Opinion Poll conducted in June, 2004 participants surveyed responded that homeowners believed that children in family owned homes were more likely to do well in school. The 2003 Journal of Housing Research from the Fannie Mae Foundation also notes that a growing body of evidence indicates that children benefit from parental ownership. The Joint Center for Housing Studies at Harvard University took the research further and concluded that the independent impact of home ownership combined with its positive impact on the home environment results in the children of owners having higher math and reading scores and fewer behavioral problems. Annette Goodman, Relocation Coordinator for Cottingham-Chalk & Associates, agrees that home ownership positively affects children’s school performance. She and her husband Steve Goodman, a transferee to Charlotte, North Carolina with Bank of America stated that “we moved into a neighborhood in early summer, loaded wit school age children which enabled our children to quickly establish friendships. By the time school started the kids already had their social life in order....they were able to concentrate on academics.”

Home Ownership Positively Affects Personal Financial Wellness
Owning a home provides a sense of security and allows families to build wealth. A home is the largest financial investment most American families will ever make, and it allows families to build financial security as the equity in its home increases. Moreover, a home is a tangible asset that provides a family with borrowing power to finance important needs, such as the education of children and retirement. Another financial benefit is the significant tax savings realized from deducting the mortgage interest and property taxes from the federal income tax and many states’ income tax. Also, the homeowner has the option to maintain the same monthly mortgage expense for the life of the loan, depending upon the type of loan chosen, creating a more stable financial position. Lastly, Americans are seeking to diversify their investment portfolios with real estate which offers a more reliable and consistent return on investment. In fact, according to the Federal Home Loan Mortgage Corporation (Freddie Mac), nationwide home values increased 11.8 percent from the first quarter of 2004 through the first quarter of 2005. "The first quarter of 2005 was the 39th consecutive quarter in which all nine regions of the United States had positive annual home price growth," noted Amy Crews Cutts, Freddie Mac deputy chief economist.

Personal Financial Wellness Affects Job Productivity
According to the Personal Finances and Worker Productivity Report by So-hyun Joo and E. Thomas Garman, personal financial wellness affects job productivity. Joo and Garman used a multiple regression analysis to control demographic characteristics, financial stressors and dependent variables such as absenteeism and the work time use index. Nine personal financial measures including overall satisfaction with financial situation and monthly debt were entered into the regression equation. The results showed that those who reported high levels of personal financial wellness typically dealt with fewer personal financial matters at work and showed lower absenteeism. In summary, the Personal Finances and Worker Productivity Report concluded that because the financial wellness of employees reflected on absenteeism and work time use for personal financial matters, improvements in financial wellness may lead to lower absenteeism and a reduction in work time used for personal financial issues.

Home ownership has many advantages – both financial and personal. Home ownership creates external benefits for individual homeowners, neighborhoods and society as a whole. Homeownership acts as a powerful economic stimulus. The benefits of home ownership accrue on every level of society as well as the individual homeowner, the homeowner’s neighborhood and the national economy.