Home Ownership and Happiness

A country’s homeownership rate is not positively correlated to its happiness or GDP.

Real Estate News

Homeownership and Happiness

Countries with the Highest Home Ownership Rates Are Neither The Richest Nor the Happiest.

The National Association of Realtors (NAR) constantly promotes and incessantly lobbies for increased home ownership touting the supposed stabilizing social benefits.

Despite a multitude of U.S. government programs, federal agencies and the Federal Reserve all working and spending feverishly to boost homeownership, the homeownership rate in the United States is declining.

Should we be worried? or be happy?

Who is Happier: Renters or Homeowners?

An article in MSN Real Estate recently asked “Who is Happier, Renters or Homeowners?” The article concluded, while listing more pluses for renter happiness than homeowner happiness, neither renters nor homeowners were happier and that happiness was determined by the renters’ or homeowners’ income level.

In favor of renter happiness, renters:

– have no mortgages;

– have no foreclosure fears;

– spend more time with friends;

– have less house “pain”;

– have better love lives; and

– have greater flexibility/mobility

In favor of homeowner happiness, homeowners:

– are wealthier;

– are healthier if they have paid off their mortgages;

– have higher self esteem – The Department of Housing and Urban Development found children of low income families who owned their own homes performed better and had higher graduation rates ; and

– are more involved in their communities

In contrast, a recent Wall Street Journal article, citing a paper from the University of Pennsylvania’s Wharton School, concluded renters were happier.

Are Countries With Higher Homeowership Rates Happier and/or Richer Than Countries With Lower Homeownership Rates?

Happiest Countries and Their Homeownership Rates and Rankings

The happiest countries in the world have modest home ownership rates. The happiness of countries, like individuals, seems to be tied more to their wealth than to their levels of homeownership. Of the ten happiest countries in the world, only Norway (at #10) ranked in the top ten countries with the highest home ownership rates.

Homeownership and Wealth

Richest Countries and Their Homeownership Rates and Rankings

The richest countries in the world don’t have the highest home ownership rates. Indeed, the richest country in the world, Qatar, has one of the lowest homeownership rates on the planet. Switzerland, the seventh richest country, has a homeownership rate of just 43.9 percent and ranks 43rd in homeownership among countries.

Countries with the Highest Homeownership Rates

With the exceptions of Norway and Singapore, the top ten countries with the highest homeownership rates are a relatively poor and unhappy bunch.

The countries ranking from 11-20 in homeownership are also not particularly rich or happy countries. Many are from the former Soviet Union.

Countries with home ownership rates around 60-70% tend to be the richest and happiest countries. These are countries with substantial percentages of renters and homeowners and a relatively mobile workforce.

Should Homeownership be Encouraged?

U.S. Government Policies

According to the data, countries with near universal homeownership rates are neither the happiest nor the wealthiest.

Should the U.S. government continue to zealously promote home ownership?

Is it sound economic policy to create programs designed to get as many people to move in and out of increasingly more expensive used homes?

Would economic policy be more effective if it were designed to boost domestic production and employment rather than home prices?

What if the yacht lobby were stronger in the United States? Would the U.S. promote yacht ownership citing the benefits of self esteem and stable nautical communities? Would we have “Sail-y Mae” loan guarantees to promote universal yacht ownership and special bailouts for “underwater” yachts?

National Association of Realtors

Should NAR continue the “there’s never been a better time to buy (or sell) a home” marketing mantra designed to drum up business for its membership?

Would NAR be more effective promoting its Realtor member services instead of promoting home ownership in general?

What if the American Bar Association started advertising – “there’s never been a better time to bring that law suit” to drum up business for its lawyer members?

Perhaps it’s time for the U.S. to rethink the importance of homeownership in its policymaking and for NAR to rethink their marketing campaigns advocating home ownership.

Sources:

Home ownership rates, Qatar homeownership rate, U.S. 2014 homeownership rate , happiness rankings and GDP rankings.