Sal Aranda: U.S. will remain a nation of homeowners

There will be no quick fixes to the nation’s housing’s woes, but one outcome already appears certain: The United States will not become a nation of renters.

It will remain a nation of owners for good reasons: There simply are too many benefits — social, emotional, financial and otherwise — to own versus rent.

A recent analysis over a 31-year period across 23 metropolitan areas compared the ownership benefits in terms of appreciation and interest deductibility and the costs homeowners incur with down payment, taxes, insurance and maintenance.

When it was assumed that renters re-invested any savings in rent (versus a higher monthly mortgage payment), maintenance and down payment, renters had a greater portfolio than buyers in 91 percent of the areas examined.

However, when the model allowed renters to spend any savings rather than re-invest those savings, 84 percent of buyers came out ahead.

“We knew that homeowners, on average, accumulate more wealth than renters,” said Ken Johnson, editor of Journal of
Housing Research at Florida International University. Johnson spoke at a recent gathering in Anaheim of Realtors and conducted the analysis with Eli Beracha.

“These findings indicate that homeownership is a self-imposed savings plan,” Johnson said. “Not everyone should own a home, but from a financial perspective, people who are planning to stay in a property over the long term can benefit from buying.”

Even with the economic recession over the last several years, according to the most recent data from the Federal Reserve Board, a homeowner’s net worth is 45.9 times that of a renter’s.

Another analysis conducted by Johnson, Beracha, Hilla Skiba and Mark Hirschey determined that housing affordability is at record levels.

Twenty-three states are at 30-year record levels of affordability based on price-to-income ratios, and all 50 states are at 30-year record affordability levels based on mortgage payment-to-income ratios.

“Homeownership is more affordable today than at any time over the last 30 years,” said Johnson.

Beyond the financial advantages of homeownership, Johnson also cited several studies that have demonstrated how homeownership enhances civic pride, improves voter turnout, increases personal happiness, reduces crime and provides a better familial environment.

Those findings come as no surprise to Realtors.

Realtors, like the nation’s 75 million homeowners and the many others who aspire to one day own a home, know homeownership is an investment in the future of families, communities, and the nation.

That is why Realtors will continue to fight for public policies that promote responsible, sustainable homeownership and affordable, accessible credit.

Realtors believe that anyone who is able and willing to assume the responsibilities of owning a home should have the opportunity to pursue that dream.

Sal Aranda is president of the Santa Clarita Valley Division of the Southland Regional Association of Realtors. David Walker, of Walker Associates, co-authors articles for SRAR. The column represents SRAR’s views and not necessarily those of The Signal. The column contains general information about the real estate market and is not intended to replace advice from your Realtor or other realty related professionals.