Why Homeownership Still Matters

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By Robert Dietz

While the Great Recession raised questions about the concept of homeownership, challenging its role as a fundamental piece of the nation’s social fabric, it continues to be synonymous with the American Dream and a gateway to the middle class, according to public opinion and academic research.

According to the Census Bureau’s Current Population Survey/Housing Vacancy Survey (CPS/HVS), the national homeownership rate fell from 69 percent in 2004 to 65.4 percent for 2012—the largest decline since the Great Depression. Nevertheless, the downward trend in homeownership is slowing, according to quarterly CPS/HVS data, indicating that the period of large declines has ended with the gradual unlocking of pent-up housing demand.

Why does this matter? Homeownership—attained through prudent lending practices—confers benefits for the homeowner’s family and their surrounding community, including improved health and school performance for children, increased civic engagement and volunteering, reduced crime, and higher lifetime wealth.

Indeed, in examining the lessons learned from the recent housing crisis, the Bipartisan Policy Center’s Housing Commission noted that homeownership can “produce powerful economic, social, and civic benefits that serve the individual homeowner, the larger community, and the nation.”

The reason is fairly simple: economics. When someone owns an asset, they are more likely to engage in behavior that ensures its future value. Unlike stocks and bonds, a home’s value is determined by both the physical quality of the structure as well as the general character of its neighborhood. That means homeowners are more likely to spend their limited time and resources engaged in improving their neighborhood, if for no other reason than to protect the value of their investment.

Clearly, for most people there are distinct times to rent and own, based on income, marital status and other variables, and housing policy should provide a balance between these housing needs. However, given the ability of homeownership to generate family and community benefits, ensuring policies that facilitate sustainable homeownership must remain at the core of our nation’s housing policy agenda.

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