A new study recently completed by two California universities puts a new spin on the effects of homeownership on children in owners' families.
The study showed that homeownership is associated with lower high school dropout rates and lower teen birth rates, according to 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 is titled "Measuring the Benefits of Homeowning: Effects on Children." It 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 5 percentage points lower than for children living in rentals.
It's interesting to note that the size of the down payment 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," the study report noted. "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.
Questions from readers
Question: Are more homeowners now launching remodeling projects?
Answer: Yes, in fact remodeling activity has climbed to its highest point since the third quarter of 2005, according to the National Association of Home Builders. The greater momentum in remodeling is yet another positive trend recently trickling through the housing sector, NAHB reports.
"The strength of remodeling activity in the current market, especially in owner-occupied properties, shows that home owners are investing in remodels as home prices stabilize," says George Moore Jr., NAHB Remodelers chairman. "As owners become more confident that investments in housing will hold their value, they are beginning to undertake projects to improve their comfort that they had been putting off."
Q: What do the experts say about long-term housing trends?
A: Here's a quote from Roger Altman, chairman of Evercore Partners and former deputy Treasury secretary: "The turn in the housing market is occurring now and it should become a boom by 2015. It will be powerful enough ... to lift the entire U.S. economy," he wrote in a Financial Times column.
Altman said he expects housing will add 4 million jobs to the economy over the next five years as pent-up demand for home purchases drives building and home prices higher.
Q: When buying a home, is it necessary to purchase title insurance?
A: If you're obtaining mortgage financing, the lender requires title insurance coverage. It's a very costly item on the list of closing costs -- one that's difficult to justify considering the title company's low claim expenses and minimal work required to search properties in today's high-tech world.
One thing buyers can do is shop around for the lowest price. Premium rates vary from company to company and state to state. Also, check with the company that provided the last title policy on the property. They have completed much of the work and might give you a special low rate.
Q: Why is there a sharp upturn in production of new homes?
A: Here's one key factor contributing to the rising number of new homes.
A significant drop in distressed home sales is laying the foundation for a growing demand for new homes, according to Capital Economics analyst and property economist Paul Diggle.
In a U.S. Housing Market Update released by the firm, Diggle notes that, while a substantial overhang of properties still in the shadow inventory will keep distressed sellers in the market, the peak in distressed supply appears to be well behind us, giving homebuilders more room to grow with less competition from discounted existing homes.
Q: How much money has been lost from home foreclosures in recent years?
A: The Center for Responsible Lending reported that, based on the 10.9 million loans that entered foreclosure between 2007 and 2011, approximately $1.95 trillion in property value has been lost or will be lost by residents who live close to foreclosed properties.
"This estimate includes losses stemming from completed foreclosures and future losses projected on foreclosure starts. The average spillover cost per family is or will be $21,000 in household wealth, or 7 percent of median home value," according to the report.