A new study by a University of Iowa researcher debunks the idea that children raised in a house that their parents own do better in life than kids who live in rental units. University of Iowa business professor David Barker’s research concludes home ownership has "virtually no impact" on high school graduation rates or test scores.
"When we take account of other factors like family wealth, vehicle ownership, mobility — several other family characteristics, the effect of home ownership by itself is not statistically significant," Barker says.
Barker notes that each year, the federal government provides about $100 billion in tax breaks and subsidies to promote home ownership. "Home ownership is encouraged in the United States through the tax code and through various government programs and one of the justifications for those expenses is that home ownership benefits children and this has been backed up by academic research," Barker says, "and so our results …make us doubtful of the results of that research."
Barker, though, admits these results were a bit of a surprise. "There had been quite a bit of research showing the benefits of home ownership," Barker says. "We just thought we’d look at it a little more and see if the results held up." Barker collaborated with an economist at the Congressional Budget Office in Washington, D.C. on the study, which will be published the "Real Estate Journal."
The article cites a historian who studied home ownership in 19th century Massachusetts. "(He) found that the children of homeowners were less…upwardly mobile in the job market than children of renters," Barker says, "and the idea was that possibly homeowners were spending too much money on their houses and not enough money on their childrens’ education."
Barker’s study concluded children who grow up in rental houses and apartments are at no greater risk than kids raised in homes their families own. Barker argues the Bush Administration’s push for an "ownership society" pushed some people into buying homes they couldn’t afford, prompting the downturn in the mortgage, construction and real estate sectors of the economy.