Effect Of Homeownership Research Articles

Homeownership and the perception of material security in old age

ABSTRACT Homeownership has been shown to be related to various aspects of well-being, although both the causal nature of this relationship and the possible channels behind it have been difficult to identify. We examine an important mechanism which could be responsible for the positive effects of homeownership, namely its role in providing material security in old age. Using data from 15 European countries, we analyse the relationship between homeownership and material security, as measured through subjective evaluation of the likelihood of being better or worse off in the future. We find that homeowners have a higher level of material security than renters, and this association is especially strong for those living in big cities. For this subsample, in comparison to renters, owning a property in the top quartile of the home value distribution is associated with an increase in the probability of expecting to be better off in the future by as much as 43%. We interpret the results as support for the argument that homeownership offers a very particular form of material security, which, through reduction of perceived material risks, may be behind its positive implications for well-being.

In Debt but Still Happy? Homeownership and the Satisfactions with Housing and Life

We investigate the relationship between homeownership and life as well as housing satisfaction. Following several studies, we confirm the positive relationship between housing satisfaction and homeownership using panel data from Germany. Contrary to most of the literature, we find no positive significant effects of a home purchase on life satisfaction in the long-term. Analyzing short-term effects in an event-study design, we show that both life and housing satisfaction anticipate the acquisition and adapt shortly after. Debt-free buyers, however, do not experience anticipation or adaptation effects at all. Comparing outright homebuyers to debt-financing owners, we show that having a real estate loan affects homeowners’ life satisfaction negatively. The larger the mortgage burden relative to the household income and the last rent paid, the larger is the negative effect on life satisfaction. We conclude that the mortgage burden of a home purchase can offset the positive effect of homeownership.

Homeownership, the unemployed and financial hardship

We follow 3,826 Australian unemployed persons, approximately half of whom are homeowners. We conduct a matching analysis and find that homeownership reduces both experienced and perceived financial hardship. Building on recent findings in the literature that the presence of financial hardship deteriorates job search quality (i.e., stressors like financial hardship lead to the adoption of haphazard rather than focused job search strategies), we introduce financial hardship as a novel channel through which homeownership affects labour market outcomes of the unemployed. In our matching analysis, we include historical labour market performance and personality traits linked to mobility preferences, to address endogeneity. We also confirm that homeownership reduces residential mobility and increases neighbourhood social capital but find no effect on reservation wages of the unemployed. Considering declining homeownership rates across the OECD in recent years, our findings are both timely and imperative to understand the effect of homeownership on labour market outcomes of the unemployed.

How Does Homeownership Shape Public Service Coproduction? Evidence from a Public Complaint System in Beijing, China

Homeownership has been widely regarded as a critical determinant of public participation in social science research. However, the role of homeownership in public service coproduction has been under-researched. This study advances a theory of public service coproduction that accounts for the effect of homeownership and its underlying mechanisms by theorizing that homeownership increases coproduction participation by directly motivating individuals to protect their financial investments and indirectly improving their knowledge about government. Original data from a random telephone survey of 2,167 residents conducted in August 2022 in Beijing, China were used to test the hypotheses, and a series of analytical tools (e.g., weighted models, matching, and sensitivity analysis) were used to validate the theorized effects and mechanisms. Results consistently show that homeowners are more likely to report public service complaints to the government than nonowners. These findings have important implications for future theoretical research and practical efforts to promote public service coproduction.

Home, unsweet home – effect of homeownership on financial investments of Indian households

PurposeThe study analyzes the relationship between homeownership and financial investment of households in the context of emerging markets like India. It also examines how homeownership affects the portfolio decisions of Indian households.Design/methodology/approachUsing the nationally representative All-India Debt and Investment Survey of 2019 and employing an instrumental variable approach, the authors analyze the relationship between homeownership and the share of financial assets held by Indian households. The study also employs several sensitivity checks, including alternate estimation techniques and alternative definitions of the housing variables, and accounts for additional factors to ensure that the authors are able to capture the effect of homeownership on the outcome variable.FindingsThe analysis suggests homeownership crowds out financial investment in India due to high repair and maintenance costs. The negative effect is mainly observed in urban households. Further, the findings imply that homeownership leads households to reallocate their asset portfolio. Homeowners have a lower share in liquid short term deposits, indicating the high liquidity risk of their portfolios. On the other hand, homeownership increases the share of long term retirement funds along with no effect on risky asset share. The authors observe that the crowding out effect is more striking for younger households and poorer households with low income, and the effect is lower for indebted households.Practical implicationsThe findings underscore the need for financial awareness programs so that housing does not crowd out liquid investments of households. Additionally, the results highlight that policies should first focus on young and poor households as the negative effect is more prominent for these groups. Finally, there is scope for policies to support repair and maintenance costs incurred by vulnerable households to reduce the negative effect of housing on liquid financial investments.Originality/valueThis paper is among the few studies that provide insights into how homeownership relates to financial investment and portfolio decisions in the context of an emerging economy. Furthermore, the heterogeneous effects based on poor economic status and age underscore the need for complementary policies.

The effect of home ownership on the independence and participation of Kurdish women in society. A quantitative study of Sanandaj in Iran

AbstractHousing is a great family asset, especially in developing countries. Since economic resources bring social and political power, home ownership can be very influential in enhancing people's socio‐political power. The benefits of home ownership become even more notable among groups of people who were deprived of such power. In Sanandaj, home ownership shows a much lower rate among women than among men, and it is therefore interesting to know whether an increase would empower women and in what ways.Methodologically, this study used the Sanandaj Document Registration Office as well as a survey (a questionnaire filled out by 300 female homeowners in Sanandaj) to collect the data. The analysis of the data is based on the Kendall correlation test and Path analysis test. The research results show that there is a very high correlation between home ownership (as an independent variable) and economic independence, decision‐making independence and participation of women in urban communities (as dependent variables). The article concludes that home ownership can significantly improve the independence and participation of Kurdish women in Sanandaj, and makes a number of policy recommendations to reach this goal.

Mortgage market, wages and homeownership

PurposeThis study deals with the main issues concerning the interplay between homeownership and labour market outcomes, namely (1) the relation between homeownership and labour market outcomes, at both the individual level and the aggregate level, and (2) the relation between homeownership and human capital.Design/methodology/approachThis paper is both theoretical and empirical. A search and matching model of the labour market is developed to explain the strong relation between mortgage markets and wages. A regional panel analysis in Italy is used to verify the interplay between homeownership and wages.FindingsHomeownership is not, by itself, a condition for receiving higher wages, but rather higher wages increase the probability to become a homeowner, since they positively affect the probability of acquiring a mortgage from the bank. Eventually, wages cause homeownership, but the reverse may not be true.Research limitations/implicationsThe paper focuses on the labour market, while the housing market model is restricted to the mortgage market.Practical implicationsThe positive effect of homeownership on wages is hard to theoretically formalise and is not empirically proven. Before investigating a (potential) bidirectional relationship between homeownership and labour market outcomes, therefore, the related literature should assume a new theoretical link between homeowners and wages.Social implicationsThe result that “homeownership is not, by itself, a condition for receiving higher wages” has positive implications for human and social development. If homeownership could lead to better labour market outcomes, indeed, socio-economic inequalities would increase in the society, because homeownership would be the starting point of a “lucky” circle that increases the well-being of people who are already wealthy.Originality/valueFirst, this study clearly explains why the microeconomic result that homeowners are more likely to be employed than tenants is consistent – at the aggregate level – with a negative relation between homeownership and better labour market outcomes. Second, the related literature has largely ignored the social implications of the topic. A potential bidirectional relation between homeownership and (better) labour market outcomes, indeed, could imply an increase in the well-being of people who are already wealthy.

Homeownership and subjective well-being: Are the links heterogeneous across location, age and income?

This article examines the impact of homeownership on subjective well-being and how it varies by location, age and income in Australia. We apply panel data models with instrumental variables within a two-stage modelling framework and find that homeownership, particularly outright ownership, positively affects subjective well-being – as measured by life, financial, home and neighbourhood satisfaction – relative to renting. However, these effects are not homogeneous. Outright owners in major urban locations enjoy higher financial satisfaction but poorer neighbourhood satisfaction than their counterparts outside major urban locations. The subjective well-being gap between owners and renters widens as age increases within the age range of 30s to 60s. However, the presence of mortgage debt depresses the financial satisfaction associated with homeownership. Beyond age 50, the existence of a mortgage debt burden cancels any positive financial satisfaction effects that homeownership has relative to renting. As income increases, the positive effects of homeownership on subjective well-being diminishes in the domain of financial satisfaction This reflects greater diversification in high-income households’ asset portfolios compared to low-income households’ portfolios. We discuss the policy implications of these heterogeneous effects.

Financial knowledge and financial behaviour: The moderating role of home ownership

The relationship between financial knowledge and financial behaviour has been widely studied in previous literature. Numerous works conducted in different contexts have found a positive relationship between them. The objective of this paper is to test the effect of homeownership on this relationship. To this aim, we perform extended ordered probit regressions. We use data from the Survey of Financial Competences conducted by the supervisor of the Spanish securities markets and the Spanish central bank. The results show evidence that supports the hypothesis that home ownership has a moderating effect on the relationship between financial knowledge and financial behaviour.

Has the High Rate of Home Ownership in China Affected Residents’ Subjective Evaluation of Social Status?

Objective measures of social status based solely on socioeconomic resources have inherent limitations, impeding an accurate assessment of residents' social status issues. As a result, subjective social status has gained considerable significance in the maintenance of social order and stability. Using 2018 China Family Panel Studies (CFPS) data, we employ the Probit model to empirically examine the effects of home ownership in China on their subjective social status and their influencing mechanism. Our findings indicate that individuals with housing have higher subjective evaluations of their social status compared to individuals without home ownership, and individuals with multiple suites have higher happiness and life satisfaction. Further mechanistic analysis revealed that individuals with home ownership were able to accumulate household wealth and alleviate the sense of relative deprivation compared to individuals without home ownership, thus enhancing their subjective evaluations of their social status.

Homeownership and financial literacy: evidence from China in the perspective of ‘learning by doing’

Financial literacy is becoming an increasingly important policy consideration, yet its determinants are still underexplored. From the theoretical perspective of ‘learning by doing’, the effect of homeownership on financial literacy in urban China is identified by the instrumental variable strategy. First, the borrowing experience to purchase a home can awaken homeowners to develop basic financial knowledge, but the resulting debt burden constrains homeowners from participating in the financial market, crowding out their access to advanced financial skills. Second, the growth in home equity wealth induces homeowners pledge high-value properties as collateral and invest in more homes, in which case the collateralizing experience facilities the advancement of basic finance literacy, while locking the asset portfolio in the housing sector hinders homeowners from learning advanced financial skills. Moreover, the specific kind of financial literacy that homeowners show an advantage in differs depending on their income. These findings cast a new light on understanding the return of housing property to family financial affairs.

The Effects of Homeownership on Social Capital

Access to homeownership is becoming increasingly limited due to various factors related to a decline in social capital, including sense of stability, security, and community attachment. This study examined the relationship between homeownership and social capital in Indonesia at the household level while addressing endogeneity and heterogeneity issues. This research used panel data from the IFLS-4 and IFLS-5 surveys, employing a fixed-effect regression model with robust standard error and instrumental variables. The study found that homeownership significantly impacts social capital in Indonesia. Furthermore, the effect of homeownership differs between Java and non-Java households and between urban and rural households. The study also identified other significant influencing factors of social capital, such as household size and monthly income. It is concluded that policies aimed at increasing homeownership may positively impact social capital in Indonesia. This research has provided evidence of the heterogeneity of the effect of homeownership on social capital based on geographical location and household characteristics, suggesting that policymakers should develop policies to meet the specific needs of each group to maximize the positive impact of homeownership on social capital.

Homeownership in the equilibrium unemployment theory

Purpose This theoretical study aims to clarify the (a priori) ambiguous effect of homeownership on unemployment. In general, in fact, homeownership discourages job mobility, but homeowners are less likely to be unemployed than tenants, since homeownership would seem to be positively related to human capital.Design/methodology/approach This study develops a modified version of the benchmark theoretic model of the labour market – the well-known “equilibrium unemployment theory” – where homeownership affects both the “Beveridge Curve” (BC, by means of job immobility) and the “Job Creation Condition” (JCC, by means of human capital).Findings The general result is that an increase in homeownership increases unemployment. Therefore, policymakers could encourage job mobility, before facilitating homeownership. This policy implication, however, may not apply in the case of high inflation and/or low nominal interest rate, and when the job destruction rate depends on the homeownership rate.Research limitations/implications The model studies the steady-state equilibrium of the labour market, so the policy implications only relate to the long-run. The model, therefore, does not consider the short-run effects of homeownership on unemployment (which may differ from the long-term results).Practical implications The model suggests a public policy characterised by large investment in rail lines and subsidised commuter fares. By promoting a more efficient allocation of workers across regions (and, thus, job mobility), indeed, this policy can be a good way to increase employment, without harming homeownership.Social implications The practical implication of this model is also a social implication, since it relates to homeownership and housing tenure.Originality/value To the best of author’s knowledge, this is the first model that introduces the key role of homeownership in the so-called “Equilibrium unemployment theory”. Precisely, the model uses a modified version of both the BC (which includes the negative effect of homeownership on the overall job search intensity of unemployed workers) and the JCC (which includes the positive effect of homeownership on both the business start-up and the human capital of workers). By comparing these two opposite effects, this theoretical work makes clearer the net effect of homeownership on unemployment.

Testing the Oswald hypothesis with Australian census data 2001-2016

The Oswald hypothesis is that home ownership reduces mobility and through that channel results in poorer labor market outcomes. There has been only limited previous evidence on the Australian case. Here we use data from the first four Australian censuses of the twenty-first century, aggregated at the smallest geographical areas for which statistics are released. We propose testing the Oswald hypothesis by estimating the effect of home ownership on the full-time employment rate. Modelling the unemployment rate, as is often done in testing the hypothesis, produces implausible results with respect to the control variables, most likely due to the limitations of the official definition of unemployment. We find that, in modelling the full-time employment rate, the control variables for educational and demographic factors have the theoretically plausible effects, while variables capturing rates for both outright home ownership and with mortgage home ownership are positively related to full-time employment rates, with the effect of the former stronger than the latter. Our findings strongly contradict the Oswald hypothesis.

Moving up the social ladder: homeownership and expected socioeconomic status among migrant young adults in China

A substantial body of literature on the promotion of socioeconomic mobility has focussed on the role played by government support and human capital investment. However, homeownership as a channel for upward socioeconomic mobility has been under-researched. This study investigates the relationship between homeownership and expected socioeconomic status by using data from a self-conducted survey in 2021 on migrant young adults in China’s five superstar cities (i.e., Beijing, Shanghai, Guangzhou, Shenzhen and Hangzhou) where housing prices have been soaring in the past decade. Results indicate that homeowners expect higher socioeconomic status 5 years later than renters. This effect cannot be explained by household characteristics, such as current socioeconomic status, income and education, and occupational characteristics, such as job positions and work units. Explanations from the perspective of asset appreciation and social integration are examined for this effect. Further analyses show a larger effect of homeownership for those who own at least two homes, with a college degree or above, or with a mortgage loan.

The reasons that younger homeowners are less likely to become entrepreneurs: The role of capital constraints

<p>Considering that housing is the single biggest asset for most households, owning a home may create barriers to entrepreneurship for young people who generally accumulate relatively little wealth due to a short-term career and low income. Using longitudinal data from the China Family Panel Studies (CFPS) survey, our empirical work suggests that homeowners are associated with significantly less propensity for entrepreneurial engagement and the negative homeownership effect on entrepreneurship is much larger for younger homeowners. These findings are robust to omitted variable bias, reverse causality and model misspecification. We explore the mechanism through which capital constraints related to housing purchase may more affect younger homeowners from starting entrepreneurial activities. We find strong supportive evidence for this mechanism.</p>

Housing and portfolio choice: Evidence from urban China

Standard theory predicts that homeownership has both substitution and diversification effects on a household's investments in risky financial assets. Findings from previous empirical studies are inconclusive regarding the net effect. Using data from three surveys in urban China, this study investigates whether homeownership crowds out investments in risky financial assets. The study finds that owing a home decreases a household's probability of participating in the financial market and reduces its total amount of risky financial assets and the share in total household wealth. The crowd-out effect of homeownership on household risky financial asset investment is heterogeneous. Different from existing studies, the mechanism of the crowd-out effect is liquidity constraints rather than mortgage commitment risk, and households with multiple houses also show diversified asset allocation characteristics in China.

Homeownership and fertility intentions among migrant population in urban China

This study examines how homeownership is associated with fertility intentions among migrant population in urban China. Using data from the 2017 China Migrants Dynamic Survey, after controlling for a wide range of household demographical and socioeconomic characteristics and city fixed effects, we find that homeowners are on average 1.12 percentage points more likely to desire future children than renters. The estimated homeownership effect has on average a 7.8% increase in the desire for future children. This result is robust to a series of different model specifications. Moreover, we find that the homeownership effect on fertility intentions mainly occurs in households without children. Homeowners having full property ownership have a higher desire for future children than renters. On the contrary, those having joint ownership of property do not differ much from renters in terms of the desire for future children.

The Effect of Homeownership on Low-Income Families: A Pilot Study with Habitat for Humanity

While some studies have attempted to prove the existence of positive benefits associated with homeownership, the so-called “homeownership effect,” few studies have been able to isolate the impact of homeownership on low-income families from neighborhood effects. In a pilot study using survey data collected from applicants to the U.S.-based housing charity Habitat for Humanity, I employ a quasi-experimental design to compare changes in the lives of those who were selected into the Habitat for Humanity housing program to those who applied for housing but were denied. In addition, since the recipients of Habitat houses remain in the same general area as their original residence, this provides a unique opportunity for the comparison of treatment and control groups to examine the impact of homeownership apart from neighborhood effects. I find that, in comparison to denied applicants, Habitat homeowners report more positive changes in their overall life, economic situation, and their level of community involvement, but less evidence of reported improvements in their children’s educational outcomes.

The Effects of Homeownership on Wealth Distribution

Within the broader context of new dimensions of poverty such as housing poverty, energy poverty, etc., this article describes dependencies between household income, real estate ownership and socio-economic trends. We argue that income is not the principal determinant for home ownership rate, but rather recent lifestyle changes can better explain the homeownership decreasing trend in developed economies. Job mobility, family formation determinants and demographical trends seem to find well-supported basis in literature and data. Using data for the US states we have proved that the decreasing rate of home ownership may be explained by social aspects of changing lifestyle such as increasing share of population moving from rural areas to cities, age of marriage, divorce rate, career-oriented lifestyle, rather than by the frequently cited price-income ratio. We have also observed a short-term correlation between financing availability and homeownership rate, but we conclude that property prices would adjust to lose monetary policy without any long-term effect on homeownership rate. It results that government or monetary policies aimed to cushion the housing unavailability (recently increasing value of price-income) ratio may distort the housing market. We propose a new insight in the housing availability discussion.