“Homeownership is the bedrock of the American Dream!” was long an unchallenged byword in American culture. Certainly most Utah homeowners agreed during most of the 20th Century. That premise may have been rocked a little during the early phases of the Great Recession that shook the country starting in 2008, but as the housing recovery gathered steam, faith in the concept eventually returned for most folks.
The economic advantages of owning your own Utah home have been particularly dramatic lately, as historically low mortgage interest rates have made the benefits of homeownership on the family budget dazzlingly apparent. One of the further benefits was just offered in a seminar given by a prominent research economist.
As you might guess from the description of the speaker, some of the details in the hour-long presentation tended to get a little obscure. When economists have something to say, often their verbiage is less than easy to fathom—so when a research economist speaks, the audience had better pay close attention. The impenetrability factor can be daunting. Nonetheless, since this talk was presented by the National Association of Realtors®, I thought its message would be worth tuning in on.
The title of the summary was “House Price Growth When Children are Teenagers—A Path to Higher Earnings?” The question mark was a hopeful indication of the unbiased scientific nature of the research (and there’s no reason to doubt that)—but the body of evidence described doesn’t leave much question.
The answer is “yes.”
It’s the details that are somewhat challenging, but the compact explanation is that when house prices rise in a household with a 17-year-old, that teenager’s income as an adult can be expected to be above average. Likewise, a 17-year-old in a household that rents the family residence while house prices are going up has a higher likelihood of earning less in their adult years.
No explanation is confirmed for why there is such an impact, except a suggestion that they are more likely to attend a top-ranked college. In any case, the effect was marked in a sample of 892 respondents:
“For every 10% increase in home prices that occurred when children were 17 years old, the income of homeowners’ children as adults was 9% higher on average, while the income of renters’ children as adults was 15% lower.”
The takeaway for Utah homeowners is assuredly positive. It’s long been known that research shows many economic and social benefits to homeownership—among them a boost in the likelihood of educational achievement for children—probably because of the effects of a stable housing environment. Currently, since rising home values have been with us for quite a while, these latest findings of a positive outlook for “the economic trajectory of the homeowner’s children” is welcome news.
Fostering homeownership in Utah is my principal professional goal, so it’s good to hear confirmation of what seems clear on a daily basis (not to mention, another good reason to give me a call)!