Homeownership

Introduction

Housing is a basic necessity and decisions on renting or property ownership are influenced by social, psychological, and macroeconomic factors. According to Maslow's hierarchy of needs, people need health, clothing, and shelter and once they meet these physiological needs, they shift to the next needs such as safety, love, and more. Due to technological development, people are so busy to an extent they consider rental property. For example in Sri Lanka, renting is considered significant since the country has many factories and educational institutions. Supporters of renting argue that renting is better in that renters meet their requirements and personal preferences such as location, neighborhood, space, kitchen facilities, among other features.  However, it would a big mistake to ignore the intangible benefits of houseownership. Today, policymakers and housing experts have realized that American families are building wealth through homeownership. This is because, homeownership provides financial prosperity, residential stability, property values, social capital, housing security, and other variety of benefits. While renting a house may seem to be the best decision due to access to amenities and more flexibility, it is important to consider homeownership and enjoy the economic, financial, and social benefits.

 House is a fundamental need and therefore a good housing should provide adequate protection, security, good health, and privacy.  Today, economists have increased or supported the rent dwellings on the basis that renting properties are unique with different prices, and different attributes such as toilets, water supply, swimming pools, electricity, neighborhoods, open space, recreational park, and other physical attributes (Wickramaarachchi, 2015).  Tenants believe that when they rent, they do not worry about the maintenance, or think about things that need to be modernized.  Unlike homeowners who think about adding value to the house, tenants will not have such thoughts and there is no cost of property taxes, insurance, and other extra costs. There is another benefit of flexibility which means that if the tenants feel like changing the personal life, it is easier to move without being involved in endless processes (Wickramaarachchi, 2015).  Besides, people opt to rent by looking at economic aspects such as home deprecation, and mortgage stress. For example, when the level of unemployment is high, homeowners rely on mortgage payments. During an economic decline, homeowners may be unable to keep their houses in good quality and also reduce the sense of security and control. In general, proponents of renting are aware of these negative homeownership experiences and they are aware that the benefits of homeownership may change (Wickramaarachchi, 2015). They argue on the basis that the recession (unemployment and loss of home equity) may contribute to loss of estate values which then leads to psychological stress.

While proponents of renting believe that renting is a better choice, it is important to note that beyond the benefits of renting such as maximization of tax, amenities, accessibility, and optionality, houseownership is justified on the grounds of social benefits.  Forget about the amenities such as pools, laundry facilities, dryer, playground, and focus on the shared community amenities such as security and social connections. I believe that houseownership should be encouraged because of the social capital.  From a socioeconomic perspective, social capital is the root cause of social support, social cohesion, and societal wellbeing. These benefits are experienced at the individual level in that when the homeowners join hands in improving the living condition, and security, individuals develops a higher life satisfaction. The government should realize these absolute benefits and make homeownership a key policy. In other words. The Department of Housing should support homeownership and make it a social norm.  Note that low-income families will meet the unexpected benefit of good family functioning.  The family becomes more stable and as a result of stability, children will attend good schools and increase performance. In general, families will gain well-being and happiness as a result of a sense of control. Another important point is that even the community will benefit from the social capital in that as homeownership rate increases, there will be a reduction in crime rates, vandalism, litter, and more. What will happen is that homeowners will focus on increasing on neighborhood revitalization, renovation, and redevelopment.  Generally, homeownership should be encouraged to promote wealth creation which then leads to higher life satisfaction, quality health care, and civic engagement.  Also, it is important to realize benefits such as residential stability, quality housing, amenities, and a sense of control.

 Today, a large percentage of people strongly agree that homeownership is associated with financial, political, and economic gain.  For example, a survey conducted in 2011 found that 81% said that homeownership is associated with long-term investment.  Another survey done from June 2010 to October 20111 found that 87% said that homeownership creates a financial sense. On political benefits, it is important to note that people create community groups that encourage each individual to participate in voting, local election, among other processes. Homeowners also enjoy economic benefits and financial security through wealth generation.  For example, homeowners have a high net worth than renters. The net worth is received from mortgage payments and this means that the owners can live a higher standard of living and they can access other services such as quality health.  It is also important to understand the benefits that homeowners enjoy at old age. Note that when they get old or when they experience unanticipated changes, they benefit from a generous welfare state and financial security.  In general, homeownership will remain to be the source of wealth accumulation.  The government should intervene in encouraging homeownership especially to the low-income earners and help them enjoy the economic and financial benefits. Note that in the past, low-income earners could not get qualify for a loan. However, low-income borrowers qualify for a loan and own a home.

Conclusion

 The government should come up with housing policy interventions that encourage homeownership.  I understand that homeownership is more than social ideology and this means that the government should apply economic ideologies to ensure that future generations have access to homeownership. Although tenants enjoy flexibility, and low upfront costs, owning a home is the best decision. Anyone looking for long-term investment, federal tax benefits, privacy, and stability will opt for a home. The government should encourage homeownership to allow people to enjoy economic and social benefits, and a stable financial system. It is important to realize the positive externalities that occur as a result of homeownership. The government should initiate a campaign and programs to encourage people to own home to enjoy housing security, financial security, and social benefits.

 

 

 

 

 

 

 

 

 

 

 

References

 

Wickramaarachchi, N. (2015). Determinants of rental value for residential properties; A land

owner’s perspective for boarding homes. ResearchGate

Retsinas, N. P., & Belsky, E. S. (2002). Low-income homeownership: Examining the

unexamined goal. Cambridge, Mass: Joint Center for Housing Studies.

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Pawson, H., Milligan, V., & Yates, J. (2020). Housing Policy in Australia: A Case for System

Reform. Singapore: Palgrave Macmillan.