Do Kids of Homeowners Do Better Than Kids of Renters?

Richard K. Green
University of Southern California

Point of Contention: Homeownership and Child Well-Being
For this issue’s Point of Contention, we asked four housing economists with substantial knowledge of the topic to argue for or against the following proposition—“The research to date is consistent with a significant causal effect of homeownership on child well-being and the educational attainment of young people.” Please contact alastair.w.mcfarlane@ hud.gov to suggest other thought-provoking areas of controversy.

At first blush, there is no reason to think that choice of housing tenure should affect child outcomes. Economists think of tenure choice as a financial decision, grounded in the relative costs of owning or renting a house. But a problem exists with the economist's view of the tenure choice problem—for most people, in most time periods, after taking into account the transaction costs and maintenance costs of being a homeowner, owning produces an inferior economic outcome to renting. Yet, even in the aftermath of a period when owner-occupied housing has performed intensely badly, Americans seem to want to be homeowners. The question is, why?