Valuing Real Estate’s Contribution to Family Legacies and Neighborhoods
As we enter the season of gratitude, it’s an opportune moment to reflect on the valuable role real estate plays for countless families nationwide. It’s not just about building generational wealth through homeownership but also about stabilizing communities and what that means for children and our collective future.
Historical Perspectives on Wealth and Real Estate
The contrasting legacies of the Vanderbilts and Rockefellers vividly illustrate the power of investing in assets that appreciate over time. While the Vanderbilts squandered their wealth on short term extravagances, the Rockefellers built a lasting legacy, largely through strategic real estate investments. Although the Vanderbilts and Rockefellers are an excellent lesson, the most heartening stories of real estate don’t belong to dynasties, but to average Americans, people like the Kevilles from Watertown, Massachusetts. Arriving just after the Great Depression era in the 1930’s, the Kevilles purchased a modest two-unit home with a mortgage on a working person’s salary. That simple home on Dartmouth Street has served three generations of Kevilles becoming a generational asset and providing stability and financial security for decades through the ebb and flow of economic tides.
The Shift from Renting to Owning
The Kevilles participated in a cultural shift that was to change the face of America from predominantly renting to owning homes, thanks to post-Great Depression era housing policies which made mortgages more readily available. Though real estate had longs been the cornerstone of generational wealth for centuries, until mortgages became more pervasive, only the wealthy could afford real estate. Prior, a home mortgage was a foreign concept to the majority of Americans; a mere 40% of families owned their homes at the time. But then mortgages entered the U.S. housing market, and the rest is history. To contextualize just how important homeownership really is, we now know that people who own a home have on average 40 times more savings at retirement than those who rent, which underscores just how important helping others to make the leap into homeownership sooner rather than later is.
The Economic Impact of Homeownership
Trends come and go in other industries and sectors, but real estate continues to be consistent. In the past 80 years, real estate has only decreased 7 times year-over-year while increasing 73 times. Homeownership is also unique as an investment in that it serves a dual function proving shelter while growing wealth, unlike a 401K, for example.
Beyond the dollars and cents, homeownership also has a stabilizing effect on communities, the value to community and social welfare that cannot be overstated. As families gain property, they invest more in their neighborhoods, cultivate community ties, and contribute to local economies. This, in turn, attracts more investment and creates a positive feedback loop that benefits all residents.
“People who own a home have on average 40 times more savings at retirement than those who rent.”
Homeownership’s Impact Community and Children
Beyond the dollars and cents, homeownership also has a stabilizing effect on communities, the value to community and social welfare that cannot be overstated. As families gain property, they invest more in their neighborhoods, cultivate community ties, and contribute to local economies. This, in turn, attracts more investment and creates a positive feedback loop that benefits all residents.
Perhaps the impact of homeownership on children is one of the most important, something we might call an unquantifiable quotation if it weren’t actually quantifiable. According to the Harvard research paper, The Impact of Homeownership on Child Outcomes, owning a home compared with renting leads to 13 to 23 percent higher quality home environment. The independent impact of homeownership combined with its positive impact on the home environment results in the children of owners achieving math scores up to nine percent higher, reading scores up to seven percent higher, and reductions in children’s behavior problems of up to three percent. This is not to mention the psychological imprinting on children in their belief to grow up to become homeowners themselves.
Overcoming Barriers to Homeownership
However, the path to homeownership isn’t without obstacles and has become more difficult, especially for first time home buyers. The declining homeownership rates in cities across America reflect the growing challenges facing potential buyers, including high competition, and soaring prices. Leadership and education are needed to empower individuals and families who rent about special programs available to assist them getting into a home through low down payment and down payment assistance purchase programs, especially in under-served communities.
Empowering Homeownership Initiatives
A Vibe Called Fresh, is an initiative in Charlotte, NC, which demonstrates the critical role of community engagement in bridging the knowledge gap around homeownership. Robinson, the founder, has an annual block party in west Charlotte aiming to demystify the home-buying process and inform Black residents about down payment assistance programs, which is vital to increasing homeownership rates among historically marginalized groups. The American dream is for everyone.
The Future of Homeownership and Wealth Building
Real estate remains a potent vehicle for building and maintaining wealth through generations. Wise investment in property can set families on a path to financial security. The challenge ahead lies in ensuring that the opportunity to build generational wealth through real estate becomes accessible to all, irrespective of socioeconomic status, which is truly something to be grateful for.
