Forum for Science, Industry and Business

Sponsored by:     3M 
Search our Site:

 

Owning a Home Doesn't Necessarily Benefit Families

23.05.2008
A new study by a University of Iowa business researcher casts doubt on long-held beliefs about the social benefits of home ownership as a way of strengthening families and improving the lives of children, and finds that a federal policy of encouraging home ownership helped lead to the current real estate crisis.

The American Dream of owning a home may not be that much of a benefit for kids and families after all, a new study by a University of Iowa researcher shows.

Home ownership has virtually no impact on several measures of child welfare, including high school graduation rates, behavior, and math and reading test scores, the study shows, contradicting earlier studies that claim a correlation.

"The federal government spends more than $100 billion a year on tax breaks and other subsidies encouraging home ownership, justifying the expense in part by referring to studies that show ownership has a beneficial effect on children," said David Barker, who teaches real estate and finance at the Tippie College of Business. "This study, though, shows that those benefits might not exist, and it suggests that the subsidies might not be good public policy."

The study, "Homeownership and Child Welfare," will be published in a forthcoming issue of Real Estate Journal. The article is co-authored by Barker, an adjunct professor in the Tippie College of Business, and Eric Miller, an economist with the Congressional Budget Office in Washington, D.C.

Barker used information from several sources, including a recently released U.S. Department of Education database called the Early Childhood Longitudinal Study, to test the hypothesis that home ownership has beneficial effects on children. Previous studies have suggested that, for instance, low-income children growing up in rented homes were 9 percent more likely to have dropped out of high school by age 17, scored 9 percent lower on standardized math tests and 7 percent lower on reading tests.

Barker's analysis, however, found that while such factors as family wealth, race, divorce, death of a parent, mobility, and even vehicle ownership showed effects on child welfare measurements, home ownership did not.

The reason, he said, is that previous studies did not fully account for family characteristics such as wealth as the possible causes of the family benefits. When he factored these characteristics into the equation, the positive effects of home ownership disappeared. Kids raised in rental houses and apartments, he found, are at no greater risk than kids raised in homes their families own.

His argument contradicts a general belief that home ownership is inherently good, a way of thinking that was behind the Bush Administration's push to create an "ownership society" earlier this decade. Americans were encouraged to take a greater sense of ownership in such things as retirement and health care, as well as owning their own homes, on the assumption it would strengthen communities and families and lead to more responsible behavior.

But Barker said one consequence of the push to increase home ownership rates was that some people who could not afford homes were encouraged to buy anyway, and lenders were encouraged to give them mortgages. That inflated a real estate bubble that, now burst, has forced millions of homeowners into foreclosure and is dragging down the economy.

The problem with the argument promoting an ownership society, he said, is that nobody considered what would happen if people owned more than they could afford.

"The last few months have shown that pushing home ownership can lead to serious systemic risks," he said.

He hopes the next Congress and presidential administration will reconsider policies advocating home ownership but realizes change will be difficult because many of the subsidies-such as the mortgage interest tax deduction-are hugely popular politically.

Barker became interested in the issue because he and his family own rental units in Iowa and he wanted to see if his tenants really had a disadvantage over families who lived in their own homes, as implied by arguments advocating the ownership society. His study showed that a child's wellbeing is more influenced by whether the child is raised in a responsible, stable, financially secure family than whether their home is owned or rented.

"Maybe it's not good public policy to urge people into home ownership if that's not what's right for them," Barker said. "Children raised in a rented home aren't necessarily at a disadvantage."

Tom Snee | newswise
Further information:
http://www.uiowa.edu

More articles from Studies and Analyses:

nachricht Rutgers-led innovation could spur faster, cheaper, nano-based manufacturing
14.02.2018 | Rutgers University

nachricht New study from the University of Halle: How climate change alters plant growth
12.01.2018 | Martin-Luther-Universität Halle-Wittenberg

All articles from Studies and Analyses >>>

The most recent press releases about innovation >>>

Die letzten 5 Focus-News des innovations-reports im Überblick:

Im Focus: In best circles: First integrated circuit from self-assembled polymer

For the first time, a team of researchers at the Max-Planck Institute (MPI) for Polymer Research in Mainz, Germany, has succeeded in making an integrated circuit (IC) from just a monolayer of a semiconducting polymer via a bottom-up, self-assembly approach.

In the self-assembly process, the semiconducting polymer arranges itself into an ordered monolayer in a transistor. The transistors are binary switches used...

Im Focus: Demonstration of a single molecule piezoelectric effect

Breakthrough provides a new concept of the design of molecular motors, sensors and electricity generators at nanoscale

Researchers from the Institute of Organic Chemistry and Biochemistry of the CAS (IOCB Prague), Institute of Physics of the CAS (IP CAS) and Palacký University...

Im Focus: Hybrid optics bring color imaging using ultrathin metalenses into focus

For photographers and scientists, lenses are lifesavers. They reflect and refract light, making possible the imaging systems that drive discovery through the microscope and preserve history through cameras.

But today's glass-based lenses are bulky and resist miniaturization. Next-generation technologies, such as ultrathin cameras or tiny microscopes, require...

Im Focus: Stem cell divisions in the adult brain seen for the first time

Scientists from the University of Zurich have succeeded for the first time in tracking individual stem cells and their neuronal progeny over months within the intact adult brain. This study sheds light on how new neurons are produced throughout life.

The generation of new nerve cells was once thought to taper off at the end of embryonic development. However, recent research has shown that the adult brain...

Im Focus: Interference as a new method for cooling quantum devices

Theoretical physicists propose to use negative interference to control heat flow in quantum devices. Study published in Physical Review Letters

Quantum computer parts are sensitive and need to be cooled to very low temperatures. Their tiny size makes them particularly susceptible to a temperature...

All Focus news of the innovation-report >>>

Anzeige

Anzeige

VideoLinks
Industry & Economy
Event News

2nd International Conference on High Temperature Shape Memory Alloys (HTSMAs)

15.02.2018 | Event News

Aachen DC Grid Summit 2018

13.02.2018 | Event News

How Global Climate Policy Can Learn from the Energy Transition

12.02.2018 | Event News

 
Latest News

'Lipid asymmetry' plays key role in activating immune cells

20.02.2018 | Life Sciences

MRI technique differentiates benign breast lesions from malignancies

20.02.2018 | Medical Engineering

Major discovery in controlling quantum states of single atoms

20.02.2018 | Physics and Astronomy

VideoLinks
Science & Research
Overview of more VideoLinks >>>