Homeownership’s Pluses and Minuses

Community Builder or Divider?
From National Mortgage News 8/22/14

The benefits of homeownership are often cited in policy debates, though it has some downsides. Following are the advantages and costs of homeownership for neighborhoods and communities, as summarized in a recent research paper by Jason Fichtner and Jacob Feldman at George Mason University.

Plus: Better Upkeep
“Rental homes depreciate at a faster rate than owner-occupied, single-family homes,” Fichtner and Feldman write.

Minus: Not in My Backyard!
“Homeownership can cause political behavior that restricts the supply of new housing via zoning and other land use controls in order to raise prices.”

Plus: Skin in the Game
“Homeowners are more likely to make political choices that favor the long-run health of their community (as measured by school funding and road maintenance),” Fichtner and Feldman write.

Minus: More Income Segregation
“Encouraging more housing consumption encourages wealthier people to leave small city apartments for larger homes on the fringe of the city, thereby imposing negative social costs on people remaining in the city and increasing segregation by income,” write Fichtner and Feldman, citing a 1999 article by a Federal Reserve Bank of Philadelphia researcher.

Plus: Virtuous Inertia
“Homeowners are more likely to invest in communities because of the high cost of moving.”

Minus: More Unemployment, Less Mobility
“Higher homeownership rates lead to high levels of unemployment,” the authors write, citing a 1999 study of Europe. “Areas with renters can move more quickly in response to an economic shock.”

Plus: Civic Mindedness
“Homeowners are more likely to be informed about political figures and to be active in local politics.”

Plus: Think of the Children
“Children of homeowners are 9% less likely to drop out of school than children of comparable renters,” Fichtner and Feldman write, citing a study from 1997.

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