Research has consistently shown the importance of the housing sector on the economy and the long-term social and financial benefits to individual homeowners. The economic benefits of the housing market and homeownership are immense and well documented. The housing sector directly accounted for approximately 15% of total economic activity in 2011. Household real estate holdings totaled $16 trillion in the last quarter of 2011. After subtracting mortgage liabilities, net real estate household equity totaled $5.9 trillion. In addition to tangible financial benefits, homeownership brings substantial social benefits for families, communities, and the country as a whole. Because of these societal benefits, policymakers have promoted homeownership through a number of channels. Homeownership has been an essential element of the American Dream for decades and continues to be so even today.
The prevalence of homeownership is not universal. Across different demographic groups and even within different regions of the country, the homeownership rate varies widely. Many of these gaps are long standing. Therefore, the social benefits of homeownership differ widely from community to community. Less than half of Americans owned their homes at the beginning of the 20th century. Homeownership remained fairly stable until the onset of the Great Depression, during which many homeowners lost their homes. In the subsequent two decades, the homeownership rate rose dramatically with the rate easily topping 60% by 1960. Modest gains were made during the1960s, 1970s and 1980s. However, during the early 1990s, the homeownership rate once again trended upward as mortgage rates steadily declined and the economy expanded at rates not experienced in many years. By 2004, 69% of Americans owned their homes – a record high. The homeownership rate has since declined to 66% as of the end of 2011.
Homeownership and Stable Housing
Homeownership and stable housing go hand-in-hand. Homeowners move far less frequently than renters, and hence are embedded into the same neighborhood and community for a longer period. While 4.7 percent of owner-occupied residents moved from 2010 to 2011, 26 percent of renters changed residential location. The key reason for the higher “mover rate” among renters
is the fact that renters are younger – that is, changing and searching for ideal jobs, not yet married, and hence, literally, less committed. The mover rate or percentage of people changing residence, among 20-to-24 year-olds was 27 percent, and for 25-to-29 year-olds it was 26percent. The mover rate then declines rapidly from 14 percent for those in their early 30s to less than 5 percent for those 65 years or older.
The National Association of Realtors has done extensive research on this subject. The entire report can be viewed by clicking the link below.
Courtesy of the National Association of Realtors