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Study Concludes Homeownership Tied to Positive Outcomes for Children

For Sale Kid Credit: Jupiterimages

Homeownership is associated with lower high school dropout rates and lower teen birth rates, according to a new study by professors Richard K. Green and Gary D. Painter at the University of Southern California and Michelle J. White at the University of San Diego. The study, "Measuring the Benefits of Homeowning: Effects on Children Redux" found that, after accounting for other factors such as parental education, the dropout rate among children living in owner-occupied homes was 2.6 percentage points lower and the teen birth rate was five percentage points lower than for children living in rentals.

Key findings from the study include:

►The size of the downpayment has little effect on the outcomes for children, except when borrowers put no money down, at which point the outcomes become indistinguishable from those for renters.

►The impact of homeownership is particularly important for households with short lengths of tenure. Some had suggested that prior findings regarding the benefits of homeownership were simply due to a more stable housing situation, not necessarily ownership. These findings indicate that homeownership matters, particularly over the short term.

►Parents’ marital status, income, race or age of the mother when the child was born had little effect on outcomes, after controlling for parental education, homeownership and other household characteristics.

“In a study conducted 15 years ago, we found that children of homeowners fared better than children of renters. The devastating housing bust and its aftermath led us to question whether such findings would continue to hold up. This study confirmed those findings and produced interesting new results,” said Green, Professor, Director and Chair of the Lusk Center for Real Estate at the University of Southern California. “What we were surprised to discover in this study was that outcomes for children are not affected by the size of down payment. We suspected that more ‘skin in the game’ by a parent would produce better outcomes for children yet we did not find that to be true, unless there is no skin in the game at all.”

The study was based on an analysis of the Panel Study of Income Dynamics (PSID) and was sponsored by the Research Institute for Housing America (RIHA), the independent research foundation of the Mortgage Bankers Association (MBA).

“Does buying a home make you a better person? No, but the discipline associated with saving for even a small downpayment and subsequently managing a house is, on average, associated with the discipline needed to promote better outcomes for children," said Green. "Other factors one might be inclined to assume would affect outcomes for children but had no measurable effect in our study are parents’ marital status, income, race or age of the mother when the child was born. As we might expect, a parent’s educational attainment is an important predictor of a child’s educational success."

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