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New Study Supports Positive Homeownership Effects on Kids

by Peter Thomas Ricci

positive-homeownership-effects-study-usc-nar-owning-vs-renting

A new study on positive homeownership effects broadly supports claims that NAR made in its controversial “Moving Pictures” TV ad earlier this year.

By Peter Ricci

Earlier this year, the National Association of Realtors (NAR) received some criticism for an television advertisement on positive homeownership effects that connected homeownership with stronger communities, higher self-esteem and, perhaps most controversially, better test scores in children.

A new study from three college researchers, though, has largely supported NAR’s claims and added some interesting nuance to the mix.

Positive Homeownership Effects on School, Teen Pregnancy

Conducted by Richard K. Green and Gary D. Painter of the University of Southern California and Michelle J. White at the University of San Diego, the study analyzed the results of the Panel Survey of Income Dynamics from 1980 to 2007, which included 23,500 individuals and more than 8,000 households.

In comments accompanying the report, Green noted that he and the other researchers conducted the study to reaffirm earlier findings from a 1997 study, and see if the positive homeownership effects persisted after the bursting of the housing bubble.

Their main findings were:

  • Homeownership is associated with a lower high school dropout rate; children of homeowners are 2.6 percent less likely to drop out of school.
  • Homeownership effects are also connected to teen pregnancy, with homeownership reducing the probability of a daughter having a child by the age of 17 by 5 percentage points.
  • One of the new aspects of the study looked at the amount of the homeowners’ downpayment, and whether that contributed to the study’s findings; interestingly, there was no connection – the children of homeowners, regardless of the downpayment, have better outcomes than children of renters, though the children of homeowners with no downpayment are similar to those of renters.
  • The tenure of renting and owning also played a role, with the children of owners with longer-than-average tenures being the least likely to drop out from school; renters with long tenures had similar dropout rates to owners with short tenures, while renters with short tenures faired the worst of any group. Tenure, though, had no impact on teen pregnancy rates.

Homeownership Effects – Uniformly Positive?

As stated above, the researcher’s findings on homeownership effects largely parallel what NAR claimed in its TV spot, though it is worth pointing out that conflicting research does exist that calls into question the uniform positivity of homeownership.

And of course, not all children of renters are high school dropouts and teen moms, and there are plenty of leasing agents who work with capable clients seeking stable, long-term housing options.

Give us your thoughts – are these studies on the mark, or do they, as Mark Davison of 1000watt argued, risk alienating an entire bloc of the real estate community?

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