The benefits of home ownership: Better life! Fresher breath!
An article appeared recently in the San Francisco Chronicle extolling the wholesome benefits of homeownership. Like many real estate articles, it's based on an academic study, in this case "The Social Consequences of Home Ownership" by one Robert Dietz, professor of economics at Ohio State University.
Among the benefits of homeownership: you're happier; your children are better educated; your teenage daughter is less likely to become pregnant; you vote more often; you're more active in your community; you're more likely to recycle; you're less likely to get mugged. That's even after controlling for variables like income, education and race.
That fresher breath I mentioned? Sorry, just kidding.
If you've caught the faint whiff of cynicism, it's not about the benefits of home ownership. I've seen them, and I'm here to tell you that they're emotional as well as financial.
Home ownership is what's called a "social good". That's why the Federal government has promoted home ownership since 1934, encouraging the availability of home loans and preserving the tax advantages of home ownership. Seventy years ago, one in three people owned their home; today it's two in three. It's taken lots of expensive social engineering to get there, but the cost has been worth it.
No, my cynicism is aimed at researchers who nail the math but miss the elephant in the room. Professors of economics, even those who specialize in real estate, have a background in academia, not real estate. They work with linear regressions, not buyers. It shows.
Cue the elephant. Do the benefits of home ownership really come from home ownership itself, as the study claims? Or do those benefits just reflect the psychology and maturity of the people who buy homes?
Why do I make this distinction? Because as any savvy agent knows, there are home buyers and there are non-home buyers. Each is a distinct personality type, even when you control for variables. Bob and Mary, twin brother and sister, are recent graduates of the Computer Science program at State University. Each makes $120k a year. Bob leases a $50k luxury car, hits all the hip restaurants, takes dream vacations—and rents. Mary drives a $5k beater, dines at home, and relaxes by puttering around the house—which she owns. Bob cuts a swath through life so wide and glittering that people think he's golden. But Bob piles up credit card debt while Mary piles up home equity. Bob is all about consumption, transience and the here-and-now, Mary all about wealth accumulation, security and the future.
So here's a theory I like better: home buying is a milestone on the road of achievement, just like earning a college degree or landing your first great job. But some mistake the bells and whistles of life for its achievements, while others know that bells and whistles are just, well, bells and whistles.
And here's a theory I like even better: homeownership isn't the means by which modern man and woman, alienated from a fragmented society, puts down roots. It's the way that rooted modern man and woman puts down even deeper roots.
Where do the alienated get their community? As far as I can tell, from bubble blogs.
Just kidding. Again. A little.
Bottom line? The study is right, although I think it confuses cause with effect. But this time we're lucky. At least the study is right.