Homeowners occupy two-thirds of the dwellings in Canada, and by the looks of the still-hot real estate market, the desire to own a home is not waning. But does home ownership promote urban sprawl, racial segregation and harm to the environment? Does owning a home create healthier and happier families? Is it a good financial move that will lead to the accumulation of wealth, or does it lock too much of a financial portfolio into home equity, restricting other investments that a homeowner can make?

A recent study by Canada Mortgage and Housing Corp. (CMHC) looks at a series of hypotheses about home ownership to discuss its costs and benefits. The study uses data drawn from a variety of sources to study both the private costs and benefits of home ownership to an individual, and the costs and benefits to society in general.

So is home ownership a good thing?

In many ways, yes, say the study authors. They accept the hypothesis that "home ownership may promote personal and family well-being, including happier and healthier family members and improved child outcomes." Quoting the National Longitudinal Survey on Children and Youth, the authors say that "children of homeowners tend to score better on both mathematics and reading tests than the children of renters." The data also shows that "children of homeowners with a household income of less than $60,000 commit 18 per cent fewer property offences than the children of renters in the same income group."

The study confirmed what seems like an obvious benefit -- home ownership can provide a "substantial" benefit in terms of accumulation of wealth, although the amount of the benefit depends a lot on location. It rejects the idea that home ownership locks in wealth in home equity and limits other investment opportunities, stating that "financial instruments have been developed that permit homeowners to easily borrow against their home equity in order to diversify their portfolio for consumer spending purposes."

However, the authors accept that housing over-investment might subject homeowners to higher risk because of fluctuating house prices, but they say the cost associated with this risk is low. Home ownership also may provide a source of financial support in the case of a job loss or "expenditure shock," says the study.

From a societal point of view, the authors say the idea that home ownership increases urban sprawl is out of date. "In 2004, only 55 per cent of housing starts in Canada were single-detached," says the study. "While a desire for home ownership may have led to increased urban sprawl in the past, higher-density housing tenure options available today suggest home ownership is no longer a fundamental source of sprawl."

It rejects the idea that home ownership increases commuting, energy consumption and pollution, since ownership is "no longer synonymous with living in a single-detached home in a low-density subdivision." It says Canadians tend to become homeowners after the period during which they commute to work the farthest. And in terms of household energy consumption, it notes that homeowners have more incentive to keep their energy costs down than renters, who may have the utility costs included in their rent.

Other good things about home ownership are that it encourages recycling, and it increases civic involvement, including voting and volunteering.

So why is home ownership a bad thing?

For one thing, it's more expensive than renting, says the study. While operating costs are lower than a rental home, mortgage costs make buying a home more expensive overall. The cost of moving into your own home is also more than moving to a rental, since you must deal with closing costs such as land transfer taxes and legal fees.

Although some consumer groups may beg to differ, the study authors say that home ownership does not provide tax advantages -- and indeed, homeowners may pay more in tax than non-owners. Although the Home Buyer's Plan allows first-time buyers to withdraw funds from their RRSPs without tax penalty, they more than make up for that later with when they pay property and land transfer taxes. In the case of new homes, buyers often have to pay development fees as well. And unlike other countries such as the U.S., the cost of mortgage interest cannot be deducted from your income taxes.

From a societal point of view, the authors say they "tentatively accept that a cost of home ownership is its potential contribution to racial segregation." The study says that "Canadian homeowners with an annual household income of between $40,000 and $60,000 are 14 per cent less likely to have ethnically and linguistically diverse friends than renters of the same income group."

Home ownership is also associated with increased pesticide use, particularly by high-income households, the study says.

There is mixed evidence about whether owning a home increases the health of its occupants.

The authors say the societal costs of benefits of home ownership are difficult to quantify. "While the findings of this study are informative, they are at times limited by a lack of available data."