Homeownership Offers Big Breaks, Few Risks

There is nothing like homeownership to make people feel they are active participants in the economy, for better or worse.

It is the basis of their wealth, their ticket to mobility, the source of funds for meeting emergencies. It gives them an added reason to become involved in community affairs and to vote. It may be their pension.

Conservative advisers like to remind people that the main reason for owning a home is to put a roof over one’s head, and that thoughts about financial gain should be secondary at most. But it is hard to ignore the finances.

Uncle Sam gives tax breaks to people who borrow to buy and maintain houses--breaks that, for example, are denied to credit-card borrowers. Banks and creditors like to do business with them. Even inflation may be kinder to them.

True, inflation can cause a run-up of interest rates, and that can cause problems for those with adjustable-rate mortgages. But offsetting this is the long experience of housing prices rising faster than prices generally.

Homeownership is a foothold for new Americans. Harvard University’s Joint Center for Housing Studies points out that nearly 50% of immigrants in the 1970s were owners by 1990. Between 60% and 70% of those who immigrated before 1970 had homes of their own at the beginning of this decade.

And more than 20% of immigrants during the 1980s owned houses at the beginning of the ‘90s.

Those homes are their primary wealth, amassed by improvements, principal reductions and housing inflation. As a group, homeowners of all ages have many times more wealth than renters, much of it acquired through ownership alone.

But that’s just part of the story, the good part. The bad part concerns those who cannot own and therefore are deprived of all the advantages that accrue.

Census Bureau statistics, and tabulations and interpretations by the Joint Center, reveal imperfections in the picture that could worsen, primarily the rising burden for renters and minority ownership rates that lag badly.

Black ownership rates remain well below 50%, Hispanic rates slightly above that mark and Native Americans higher, but still below 55%.

Hidden within those statistics are reasons and explanations having to do with some of the worst social problems facing the nation, among them slums, discrimination, drugs, unemployment, crime and political instability.

All this is well-known, but the problems continue and may even worsen in spite of the billions of dollars thrown at them by the private and public sector.

Still, when all the benefits of ownership are considered, especially the economic and civic aspects, an opportunity lies ahead for the entrepreneurial genius of home builders and the wisdom of financiers.

Together with municipalities and Uncle Sam, such efforts might raise ownership rates a percentage point or two, not just putting a roof over some heads but solving a host of social problems along the way.