It’s no surprise that homeownership can create significant financial benefits over time. What’s often overlooked is the value of the non-financial advantages – to the individual, their community and society as a whole. In fact, the value of homeownership spans the realms of health, education, and civic and socio-cultural spheres.
Long recognizing these benefits, but seeking to back them with solid research, the Canadian Real Estate Association (CREA) published a white paper titled, The Homeownership Dividend for Canadians.
“We knew anecdotally that homeownership was good for people, but we didn’t have the evidence, even though there have been so many studies and so much written on it,” said CREA CEO Michael Bourque. “We went about gathering all the information, not just on the economic, but on the social side.”
The report features a vast collection of supporting research about the value of homeownership, including Statistics Canada surveys, Mortgage Professionals Canada studies, bank-generated reports, worldwide academic literature, and data from charitable organizations like Habitat for Humanity.
“It became clear from all the research that the benefits to people extend beyond the homeowner to society itself,” said Bourque. “There’s a broader dividend when you have high levels of homeownership.”
In terms of financial dividends, principal residences make up over one-third of Canadian assets, underlining the importance of home equity. Between 1999 and 2016, principal residences drove 39 per cent growth in Canadian families’ assets, acting as secure, stable investments.
“It became clear from all the research that the benefits to people extend beyond the homeowner to society itself.” – Michael Bourque, CREA CEO
There were surprises, too. “The one that stood out to me was the fact that homeownership is very much an equalizer,” said Bourque. “People at lower incomes actually benefit more from homeownership than higher income people.”
In the lowest income bracket, owners’ homes hold more than 53 per cent of their total asset value, versus 41 per cent across the board. Because higher-income owners have more mixed assets, their home equity matters less than that of the lower-earning homeowners, whose homes might be their only source of wealth. The paper shows high-income homeowners generate $15,000 in annual wealth accumulation, while the figure is $6,000 for lower- and moderate-income brackets.
The report also explores the non-financial dividends associated with the culture of homeownership, including increased stability and civic engagement, as well as better educational and health outcomes. These benefits spread from the family to the community and into the greater society through decreased drain on social programs and health-care systems, and increased civic participation.
The CREA publication suggests public policy supporting homeownership should be strengthened in light of these far-reaching benefits. One example it provides is increasing the maximum amortization period on insured mortgages from 25 years to 30, making it more affordable to enter the market.
Bourque also insists homeownership is not a partisan issue.
“No matter which political stripe, governments have promoted homeownership because it’s good public policy,” said Bourque.
“It’s very clear there are tremendous economic and social benefits to being a homeowner that extend to the broader society and therefore all political parties should be in support, as has been the case.”