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U.S. Won't be Nation of Renters

Written by Carla Hill on Monday, 14 November 2011 6:00 pm

According to the National Association of Realtors®, (NAR) the U.S. will not become a nation of renters.

Currently, over 65 percent of Americans are homeowners, a rate that has held since the 1960's. It's no wonder why most Americans seek out a home of their own.

Homeownership has both financial and social benefits. According to the most recent data from the Federal Reserve Board, a homeowner's net worth is 45.9 times that of a renter's.

"We knew that homeowners, on average, accumulate more wealth than renters,” said Ken Johnson, editor, Journal of Housing Research at Florida International University. Johnson spoke at the session and conducted the analysis with Eli Beracha. "These findings indicate that homeownership is a self-imposed savings plan. Not everyone should own a home, but from a financial perspective, people who are planning to stay in a property over the long term can benefit from buying.”

This is no wonder why. Despite recent declines in home prices, historically prices do rise over the long-term. This means an owner is paying towards an asset. They are building equity. A renter, on the other hand, is paying for a living space for that month. It is not money invested.

Homeownership is also at a generational high when it comes to afforadability. Recent studies show all 50 states are at 30-year record levels of affordability, based on mortgage-to-income ratios. Couple that with historically low interest rates and there are deals to be had.

Many buyers are still uncertain about entering the market, though. Unemployment and rampant media reminders of an ailing economy create fear and reserve.

Regardless of the ups or downs of the economy, however, social benefits of homeownership remain. Realty Times has reported on these benefits for years, knowing that buyers don't buy simply because it's the right financial time. They buy to provide stability and security for growing families.

In the NAR study, "Measuring the Benefits of Homeowning: Effects on Children,” there were significant findings that homeownership has a strong positive effect on educational achievement. Children are more likely to graduate, teenage girls are less likely to experience teenage pregnancy, and children of homeowners are more likely to be financially reponsibly adults.

The study says, "Homeowners are required to take on a greater responsibility such as home maintenance and acquiring the financial skills to handle mortgage payments. These life management skills may get transferred to their children."

Additionally, higher levels of homeownership have been shown to reduce crime rates. "Homeowners have a lot more to lose financially than do renters. Property crimes directly result in financial losses to the victim. Furthermore, violent non-property crimes can impact the property values of the whole neighborhood. Therefore, homeowners have more incentive to deter crime by forming and implementing voluntary crime prevention programs." (NAR)

"These findings are no surprise to Realtors®,” said NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I. "We, like the nation's 75 million homeowners and many other who aspire to one day own a home, know homeownership is an investment in the future of our families, communities, and nation. That is why we will continue to fight for public policies that promote responsible, sustainable homeownership; we believe that anyone who is able and willing to assume the responsibilities of owning a home should have the opportunity to pursue that dream.”

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Individual news stories are based upon the opinions of the writer and does not reflect the opinion of Realty Times.
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