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Time Magazine: As Wrong Today as They Were in 2005

Time Magazine’s cover story last week was titled Rethinking Homeownership: Why Owning a Home May No Longer Make Economic Sense.

The webpage title for the online version of the article was After Housing Bubble, the Dark Side of Homeowner Dreams.

The actual article title on the internet was The Case Against Homeownership.

It is rather easy to guess the tone of the article with phrases such as “no longer make economic sense”, “the dark side” and “the case against”. The article was rather negative.

Did Time prove its point? I think not. They attempt to undo decades of research about the benefits of homeownership with one sentence, no research defending their position and a cute little dismissal of the actual research that had already been done.

First, they made a rather bold proclamation:

Evidence that homeownership actually brings other benefits is decidedly mixed.

Mixed? That claim caught my attention. I have read and reported on research which has established the benefits of homeownership. I was genuinely interested in learning of the research done that refutes this argument. Here is Time’s ‘evidence’:

On the surface, the results are often impressive. In 1997 academic economists Richard Green and Michelle White found that children of homeowners stay in school longer than children of renters and that daughters of homeowners are less likely to become teenage mothers. A 1999 study by Denise DiPasquale and Edward Glaeser concluded that homeowners are more likely to vote in elections and be involved in community organizations.

Yet the researchers who conduct such studies often warn about taking the findings too far. Just because two qualities show up at the same time doesn’t mean one is causing the other. DiPasquale and Glaeser, for instance, attribute a big part of their findings to the fact that homeowners move less frequently: they have more time in a community than renters do to get involved.

Is Time using the findings of a study proving the benefits of homeownership to try and disprove that same study? Where are the ‘mixed’ findings showing homeownership has no benefits? That’s what they claimed to have!

A 2009 study in the journal Real Estate Economics found that kids living in owned homes are less prone to drop out of high school, but whether a family owned a car had an even stronger correlation. Should we give cars the credit? Or should we instead realize that both home and car ownership are probably markers of something else, like a stable family life or living in a nice neighborhood?

Again, they are simply arguing a miniscule point of an extensive research paper that proves the benefits of homeownership. Where is their research, their study, their expert testimony disproving this study’s results? They gave none because there is none.

Time finishes this argument with a condescending note:

There is really only one effect that seems consistently caused by homeownership: owners invest more time and money in the physical upkeep of their homes. They are more likely to make repairs. They are more likely to garden.

Homeownership is not about gardening. It is so much more than that. I find it hard to believe that Time does not realize that.

2005 Cover

The cover of a Time issue in 2005 was titled Home, $weet, Home. In that article, they talked about the financial benefits of homeownership. That article was a much better piece of journalism which tackled both sides of the issue. However, they left the reader feeling as though they would be left out of future financial fortunes if they didn’t buy a home then. They did this with statements like this which appeared in the 2005 article:

“You shouldn’t get the impression that you can make six figures in real estate by snapping your fingers. Just ask Max Kaiser. It once took him a whole hour.”

Bottom Line

In 2005, immediately before the housing bubble burst, Time suggested that owning a home might make financial sense. Thay dedicated a cover story to it. Time magazine got it wrong in 2005. Time magazine also got it wrong last week.


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6 replies
  1. Jack Babcock
    Jack Babcock says:

    Fiction seems to sell more magazines than facts. Do you think he has an accurate crystal ball? I say “no”. More likely, he flipped a coin and it came up tails. Next week, maybe heads, or not.

    Reply
  2. D.
    D. says:

    “Again, they are simply arguing a miniscule point of an extensive research paper that proves the benefits of homeownership. Where is their research, their study, their expert testimony disproving this study’s results? They gave none because there is none.”

    You appear to be either unfamiliar with or do not understand the meaning of the phrase “correlation is not causation.” Increases in ice cream sales do not cause hot weather.

    Reply
  3. Steve Harney
    Steve Harney says:

    Great point D. I do understand the point of ‘correlation vs causation’. I have no challenge with them questioning the methodology of any report.

    The question I was asking was where are Time’s studies to prove their point: “Evidence that homeownership actually brings other benefits is decidedly mixed.”

    Mix means more than one thought. Every study discussed in the article came to the conclusion that homeownership WAS beneficial. Where are the contrarian points that are required to create a ‘mix’?

    Reply
  4. Simon
    Simon says:

    Hey Steve,

    If you read the DiPasquale/Glaeser study that Time cited re: home ownership I don’t think it backs up your assertion home ownership proves the benefits of home ownership.

    It, in fact, only bolster’s D’s point:
    “A large fraction of the effect of homeownership occurs because homeowners are different in many ways from renters. We provide little evidence on the magnitude of the benefits to society of increasing homeownership and no evidence on the costs of homeownership policies (such as reduced mobility), either in absolute terms or relative to other programs that might promote citizenship.”

    http://www.cityresearch.com/pubs/homeown.pdf

    Reply
  5. Steve Harney
    Steve Harney says:

    Great points, Simon. However, the paragraph you quoted begins with the statement:

    “Overall, our results suggest that homeownership positively influences the formation of social capital, and much of the influence of homeownership occurs because homeownership increases the community tenure.”

    The study makes many other points such as homeowners are 15% more likely to vote in local elections and 6% more likely to work on solving local problems.

    The paper’s conclusion says:

    “The primary conclusion of this paper is that it appears that standard economic incentives (both the effects of homeownership and tenure) influence investment in social capital…it is likely that homeownership generates positive externalities…”

    The Time article said:

    “Evidence that homeownership actually brings other benefits is decidedly mixed.”

    The paper mentioned did not question whether there were benefits to homeownership. It questioned whether the benefits were worth policy changes.

    Again, I ask – where is the ‘mix’ of evidence?

    Reply

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