There has been nearly countless articles in the press lately concerning the decline of homeownership, how Millennials aren’t settling down as early as baby boomers did, and how the American dream is different today than it was even just twenty years ago. What is not being covered is what this actually means. Sure, there’s a decline in homeownership. So what?
This is what. Homeownership matters—and people want to be homeowners. In fact, nearly every survey of consumers regarding the American Show unanimously concludes that people desire to own. More specifically, 87% of those asked in the Housing Opportunity and Market Experience said that homeownership is part of their American Dream. It’s true—not all said they want to own right now, but they did say they want to own at some point in the future when the time is right.
Moreover, sustainable homeownership has been proven to help accumulate wealth. For example: “a typical homeowner’s net worth was $195,400 while a renter’s was $5,400 as of 2013.” Put into perspective, this essentially translates to an average homeowner being ahead of a renter by a multiple of 45 on a lifetime financial achievement scale. By the way, these numbers are a median, not an average, which is better indicative of reality because that means the numbers are not skewed by incredibly wealthy home-owning families. So, clearly home-owning is good for the individual, but it’s also good for the economy as a whole.
Typically, Americans do not see their first home as their only home, meaning they are likely to sell in 7-10 years from the date of purchase. They want to improve, and they want their home to reflect this. By consistently purchasing and selling houses, these homeowners are contributing to economic growth and job creation. All of those expenses inherent in selling a home (lawn care, remodeling, new furniture, mortgages, moving costs, realtor fees) help our economy. When you pay your mover, then they can pay for something when they eat out, or go see a movie, or buy clothes, which contributes to the local economy. Homeownership benefits everyone financially, but, really, it goes even beyond that.
There’s social incentive too. An abundance of research suggests that children of homeowners perform better in school than the alternative (children of renters). They score higher on tests. They are less prone to antisocial behavior. There are less inclined to commit crime, and less likely to use drugs or abuse alcohol. Looking outside of the home, there’s even further social benefits.
Homeowners have been proven to be more involved in community civic engagements, taking a greater role in local elections. They are more present in volunteer work. There are even health benefits to homeownership. While this may be due to increased self-control and self-worth as is proven by various academic studies, that is still no reason to discount the correlation.
Homeownership matters. The above is only the beginning of why. We should react to this incredible and unfortunate decline in the real estate market, and we should act fast.