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Renting a Home Could Improve Employment Prospects

By Allison Halliday | November 12, 2013

Many nations encourage home ownership, and it is something that most young people still aspire to, but a new study has pointed out this might not be such a good thing. It has found that encouraging people to purchase homes could lead to higher unemployment levels in the future.

The research was carried out in UK at the University of Warwick and at Dartmouth College in New Hampshire, and the study found that when the rates of homeownership increase in countries then unemployment can begin to rise a few years later. Settling down in a home that you own makes many people reluctant to move just for the sake of the job.

In addition researchers found that homeownership could lead to longer commutes to work, wasting money and time. Neighborhoods with high levels of homeownership are also more likely to be opposed to new businesses opening up locally, something that can stifle entrepreneurship.

© allapen -

© allapen -

Researchers based their study on data collected in developed nations including the US. The study does acknowledge that high levels of unemployment are connected to other factors, but in spite of this it feels there is a clear link with homeownership and that the effects can be considerable. According to the report in CNN, doubling the rate of homeownership in an area could lead to the unemployment rate doubling as well. Apparently this trend has been particularly apparent since the 1980s, and researchers in the study are calling for people to become less obsessed with homeownership. They feel it makes the labor market much less flexible, and over time could cause jobs to gradually disappear. As an example, researchers compared Spain and Switzerland, as both homeownership and unemployment rates are particularly high in Spain, while levels are particularly low in Switzerland.

It's easy to think from the tone of the report that the authors are against homeownership, but apparently this isn't the case. They point out that older workers often want to own their own home in preparation for retirement, and in this case it would have little effect on the employment rates. In countries such as Switzerland and Germany people tend to purchase homes towards the end of their working life, something the researchers feel is efficient. However when people are young it makes more sense for them to be mobile.

Even though the report is very rational and does make sense, aspiring to homeownership is something that so deeply ingrained for many of us and it could be a difficult view to change.

Allison Halliday is a Realty Biz News contributing writer. She handles International Real Estate and is a seasoned blogger.
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