We’ve talked a lot about the value and importance of home ownership and how it goes beyond financial value. There’s plenty of research available that shows that owning a home extends many advantages and benefits for its owners. The Canadian Real Estate Association recently released the white paper, titled The Homeownership Dividend for Canadians which details the benefits of homeownership beyond only financial advantages by studying and collecting data from across Canada, the USA, Europe and many other places in the world. The results are not surprising. The benefits and advantages of home ownership go beyond finance, particularly for lower and middle income families and households and this phenomenon exists across the world.
The Homeownership Dividend is not a new concept. Public policy supporting home ownership has been a common theme in the history of Canada. Beginning in 1872, the Dominion Lands Act and continuing to the present with the First-Time Home Buyer Incentive in 2019, homeownership has always been seen as a means to generate wealth for Canadians. Rather than being a political tool, this attitude towards supporting Canadians owning a home, it has always been seen as a means to improve society in many facets including civic, education, health and socio-cultural benefits. To put it simply, it is a measure of all of the benefits, financial and non-financial, homeownership brings.
It is worth emphasising the importance of the financial benefits of homeownership before we dive into the non-financial benefits. Across Canada, out of 14.1 million households, 9.5 million are owned. That’s 67.8% of Canadians who own their home. Though the figure does differ slightly across provinces, it remains close to the average. Ontario’s home ownership sits at 69.7%. There is a strong correlation between homeownership and family net worth, particularly for lower income families. With real estate as a secure and stable asset, 41.3% of total household assets across income quintiles was represented by real estate. For lower incomes, this accounted for 53.2% of total household assets. To put it in numbers, compared to renters, owners had a far higher median net worth than renters. The average homeowners’ net worth averaged $685,400 across Canada while renters were only $24,000, according to Statistics Canada.
When it comes to non-financial benefits of homeownership, there’s plenty of research that shows that homeowners often have a higher life satisfaction overall even when accounting for income levels and different socioeconomic circumstances. A couple of examples include a 2013 CMHC survey in 2013 across Canada on Habitat for Humanity households and reported homeowners had a higher sense of well-being for their children, stability and control. In 2011, there was a Chinese study that found homeownership had positive effects on overall happiness particularly due to the safety net offered by homeownership.
Additionally, for families with children, the research shows that homeownership had a positive effect on their behaviour and outcomes. A 2012 survey of Habitat for Humanity families in Toronto found that homeownership for lower income families led to improvements in their grades and self-confidence in their children. Plenty of studies in the US have shown that children in households that are owned have better behavioural outcomes and significantly higher grades in school across income levels. It shows that, have a stable social and home environment for children often sets them up for success and positively influences their outcomes and behaviours.
When it comes to mental and physical health, homeownership has a positive effect on a household’s health. Financial and residential stability reduce the stress when market fluctuations and economic downturn occur. Physical illness also shows a decline when looking at respiratory conditions such as asthma and pest-related issues. Several studies by Habitat for Humanity Toronto and the CMHC showed that homeownership programs reported significantly better health outcomes. Plenty of American universities have conducted studies that showed health outcomes both physical and mental were positively influenced by homeownership.
These benefits continue to extend to the wider community. Homeownership is often reflected in much higher rates of civic engagement and community involvement. This isn’t just something for homeowners either. Across the neighbourhood and community, positive outcomes were seen when homeownership was higher even for those who did not own a home. It can be seen through many pieces of research that broadly, homeownership is a means to maintaining strong and stable communities which greatly improves the well-being of occupants of those communities. In 2009, the Canadian Centre for Policy Alternatives released a study on low-income households in Winnipeg found many who purchased homes were able to stay in the inner urban areas, strengthening that neighbourhood community.
There’s a plethora of incredible outcomes for homeownership. Despite the rising prices and low supply, homeownership is still a viable means to improve not just a household’s financial position but also for the wider community across Canada.
Read the full white paper here.