Homeownership is Good for Americans, Good for America
If you want to improve your community and the economy – not to mention the fortunes of your own family — buy a house. It’s true. Homeowners are more involved in their communities, according to several studies. They are more likely to know their Congressman and local school board chair by name, more likely to vote, to belong to civic organizations and local churches. Their children are more likely to achieve higher grades on academic achievement tests, to graduate from high school, and to own homes of their own at a younger age.
Homeowners, effectively, are also employers. Through their taxes they pay for teacher and police salaries. They keep people working at the local furniture store and home center where they buy their dining room sets and house paint. They hire local workers to service the furnace and add a room as their families grow. The mere purchase of a house contributes a huge economic impact to a community and to our nation. Using an economic impact analysis model developed by a professor at the University of Wisconsin, Homewise calculated the economic impact of the 139 homebuyers it assisted over the last 12 months.
The total invested to purchase these homes was over $28 million. In addition, the transactions costs to real estate agents, title companies, insurance companies, etc., and purchases like drapes, appliances, and furniture represented nearly $5 million in spending in our local economy and generated 64 new jobs. Forty five of the 139 homes purchased last year were newly constructed at a total investment of $6.7 million, which, in turn, created 150 temporary construction jobs.
Like Santa Fe, a great portion of the U.S. economy relies on home ownership to keep money in motion. Eventually, this ends up being measured as part of the Gross Domestic Product. The National Association of Home Builders, citing statistics from the U.S. Bureau of Economic Analysis, notes that Americans’ investment in buying a home typically accounts for about 5 percent of GDP, while the purchase of housing services averages between 12 and 13 percent for a total of 17 to 18 percent. That figure has fallen to about 15 percent over the past couple of years as the effects of the 2008 financial crash still reverberate through the economy. Many people, seeing the still high unemployment rate and wondering about their own job security, have shied away from making the commitment to buy a home.
But we are enjoying a brief moment in time when home ownership is more affordable than it has been in decades. The combination of soft prices and record low interest rates has made it possible for millions more Americans to live the American dream. And Americans of all races, ethnicities, education and income levels still believe that owning their own home is a wonderful thing. Jennifer S. Korn, executive director of the Hispanic Leadership Network and a former White House director of Hispanic Affairs, blogged in July that, “For Hispanics, owning a home is a source of pride like no other. It is a sure sign of accomplishment, and a reward for years of hard work and sacrifice.” Korn cited Fannie Mae’s quarterly National Housing Survey showing that Latinos are more motivated to buy a home than the general population. Some 56 percent of Hispanics said it is a symbol of success or achievement.
On July 30, President Barack Obama signed into law a bill introduced by U.S. Rep. Martin Heinrich, D-NM, that will make it easier for Native Americans to build homes on tribal lands. The law takes the authority to approve land leases away from the Bureau of Indian Affairs and gives it to tribal governments. “The last thing the federal government should do is stand in the way of a family who wants to buy a home, and this bill will help make it easier for native families to buy and build houses in the communities where their families have lived for generations,” Heinrich said.
It’s nice that some people in Washington get it.
There are a couple of additional facts worth knowing about the economic impact of home ownership. Buying a home has a multiplier effect, according to the National Association of Realtors, as money spent is re-circulated into the economy. Every dollar in direct housing activity eventually grows the GDP by $1.34 to $1.62. With the American economy still struggling and with homes affordable for so many more families, the time is now to promote and encourage home ownership as a path to future economic prosperity.
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