Even the most casually informed reader has likely heard at least some of the troubling news and numbers tied to homeownership in America today.
American homeownership is at its lowest level in more than two decades, and trending lower. The recent foreclosure crisis stripped away more than $7 trillion in homeowner value in only a handful of years.
At the same time, America is on track to add another 17 million new households in little more than a decade from today. If these American families have the same hopes and aspirations as those of existing families, more than 90% will want to own a home at some point in their lives. This thought alone should give us all pause. Under ordinary circumstances it might actually be viewed as a cause for celebration. Unfortunately, the bigger picture is far more troubling, with negative implications that are much greater than the instance of gloomy sets of housing statistics unto themselves.
It goes without saying that these 17 million additional American households of the near future will demand jobs that pay a living wage and high-quality municipal services to go with them, just like the millions of American families that already exist today. They will also require a sustainable tax base that allows businesses both big and small to flourish around them. They will demand quality public schools and safe streets, and they will likely have to rely almost exclusively on their own ability to grow a family nest egg should they even hope to secure a place in America's middle class.
The fact of the matter is that homeownership has a great deal to do with the quality of life of not only those seeking to buy a home, but those families already living in homes for decades and even generations. The rate of homeownership has a great deal to do with the quality of the jobs found in the neighborhoods, towns, and cities nearby. Almost any big-city mayor, small-town city manager, beat cop, schoolteacher, or mom-and-pop business owner will tell you, vibrant communities just cannot exist without homeowners. It's as simple as that.
Take the Joint Center of Housing Studies at Harvard University's 2013 report, "Re-examining the Social Benefits of Homeownership after the Foreclosure Crisis." Among the findings of the Harvard study were the following conclusions:
Compared to children of renters (of the same age, income, race, etc.), children of homeowners:
• Are 25% more likely to graduate from high school
• Are 116% more likely to graduate from college
• Have 9% higher math scores
• Have 7% higher reading scores
• Are 59% more likely to own a home within 10 years of moving from their parents' household
Compared to renters (of the same age, income, race, etc.), homeowners:
• Are 28% more likely to repair or improve their homes
• Are 10% more likely to report that they have worked to solve local problems
• Live four times longer in a community
• Are 15% more likely to vote
Neighborhoods with higher rates of homeownership have been found to feature proportionately lower rates of property crime and violent crime. The bottom 25 states in homeownership have violent crime rates that are more than 17% higher than the top 25 states in homeownership. In fact, property crimes alone are 2.49% higher in states that have seen the steepest recent decline in rates of homeownership.
And then there is the ongoing debate surrounding the affordability of homeownership and its role in the creation of family wealth.
Homeownership has proven through the years to be an indispensable rung on the ladder of economic ascendancy for most American families. And while some might argue that an overdependence on home value as wealth proved especially troublesome for America's minorities during the foreclosure crisis, over the past decade, the average wealth of an American homeowner family was between 31 to 46 times that of a renting family, regardless of demographic characteristics. There are all sorts of perfectly logical reasons to rent at any given moment in one's adult life, but the wealth creation question can be considered both asked and answered in favor of homeownership--no contest.
Then there is the question of job creation. As it turns out, what's good for homeownership is also just as good for America's economy. The National Association of Realtors (NAR) tells us that 500 jobs are created for every 1,000 homes sold. That's roughly one new job created for every two homes sold.
NAR also tells us that each new U.S. home sale contributes an average of $60,000 in economic activity to our national GDP. The Department of Labor's Bureau of Labor Statistics reports that new homebuyers spend an average of $9,400 on goods and services in the first six months of homeownership alone. These purchases buy lawnmowers and paintbrushes, washers and dryers. These sales and property tax revenues help pay schoolteachers and firefighters. These service orders keep local plumbers and landscapers in business and help friends and neighbors to find high-paying quality jobs as architects, manufacturers, and even family-owned restauranteurs. You get the idea.
Of course, the optimal rate of homeownership in America at any given moment is a matter of market equilibrium and open to an array of equally viable opinions on the topic. All kinds of external variables play a part in either helping to determine or merely influencing the percentage of American families able to own a home at any given time.
It also bears mentioning for all readers within earshot that this opinion is not one that pits all things homeownership in direct opposition of all things rental. Realistically, America does best when there are abundant supplies of rental housing options to go hand-in-hand with affordable homeownership options. The notion that one must choose sides in a zero-sum game of "this versus that" is as shortsighted as it is counterproductive. There are times when a family might choose to rent and another time when the same family might choose to own. There are some who will only choose one or the other and perhaps with good reason given their circumstances. There must be an ample supply of safe and affordable options on both sides of the rental-or-ownership equation for either side to flourish. That's not an opinion, but a clear-cut fact.
What remains clear however, is that the rate of homeownership and the question of exactly who and how many among us will be able to purchase a home means much more than the well-being of any one individual family. America's economic and societal well-being and homeownership go hand-in-hand. Simply put, the American Dream that is so often referred to, and the broad middle class that makes it so, is literally built upon stable levels of homeownership for those who choose to own and can reasonably afford it.