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Owner-occupancy or home-ownership is a form of housing tenure in which a person, called the owner-occupier, owner-occupant, or home owner, owns the home in which they live. [1] The home can be a house, such as a single-family house, an apartment, condominium, or a housing cooperative. In addition to providing housing, owner-occupancy also functions as a real estate investment.
Some homes are constructed by the owners with the intent to occupy. Many are inherited. A large number are purchased, as new homes from a real estate developer or as an existing home from a previous landlord or owner-occupier.
A house is usually the most expensive single purchase an individual or family makes, and often costs several times the annual household income. Given the high cost, most individuals do not have enough savings on hand to pay the entire amount outright. In developed countries, mortgage loans are available from financial institutions in return for interest. If the home owner fails to meet the agreed repayment schedule, a foreclosure (known as a repossession in some countries) may result.
Many countries offer aid to prospective homebuyers to make their purchases. These measures include grants, subsidized mortgages, and mortgage guarantees. Prospective homebuyers may have to meet certain qualifications to qualify for government aid, such as being a first-time homebuyer or having an income below a certain threshold. [2]
Home ownership gives occupants the right to modify the building and land as they please (subject to government, homeowner association, and deed restrictions), protects them from eviction, and creates a right to occupation which can be inherited. In some jurisdictions, it also confers certain legal rights with regard to abutters.
Houses and the land they sit on are expensive, and the combination of monthly mortgage, insurance, maintenance and repairs, and property tax payments are sometimes greater than monthly rental costs. Buildings may also gain and lose substantial value due to real estate market fluctuations, and selling a property can take a long time, depending on market conditions. This can make home ownership more constraining if the homeowner intends to move at a future date. Some home owners see their purchase as an investment and intend to sell or to rent the property after renovating or letting the house appreciate in value (known as flipping if done quickly).
Due to the fact that homeowners have a financial stake in their homes, being a homeowner is an economically efficient course of action. In order to improve their physical and mental well-being as well as their level of life satisfaction, they have a motivation to preserve or raise the value of their properties. Conversely, renters are incentivized to view local issues through a narrow lens, could be unmotivated to participate in civic life, and could see themselves as having little social utility. [3] Compared to renters and absentee landlords, owner-occupiers are sometimes seen as more responsible toward property maintenance and community concerns, since they are more directly affected. [4]
Traditionally, home ownership has been encouraged by governments in Western countries (especially English-speaking countries) because it was thought to help people acquire wealth, to encourage savings, and promote civic engagement. However, the housing market crash of 2008 in most of the English-speaking world has caused academic and policy-makers to question this logic. [5]
Owning a home influences how an individual views the role of government. Data from OECD countries shows that when housing prices rise, individuals are more critical of the welfare state. Conversely, when housing prices drop, homeowners are more likely to favor government intervention. In the US, areas with high rates of homeownership have higher levels of voter turnout. There is also a weak relationship between homeownership and supporting Republican candidates. Data from the UK supports the idea that homeowners view the value of their home as a kind of private, informal insurance policy against economic shocks. A sufficiently valuable home protects the owner without need for government intervention. [6]
| Country | % Owner-Occupied Units in Urban Areas | Urban Population, % of Total |
|---|---|---|
| Argentina | 67% | 92% |
| Armenia | 96% | 64% |
| Australia | 68% | 89% |
| Azerbaijan | 71% | 52% |
| Brazil | 74% | 87% |
| Bulgaria | 87% | 73% |
| Canada | 68% | 81% |
| Chile | 69% | 89% |
| China | 89% | 45% |
| Colombia | 50% | 75% |
| Costa Rica | 75% | 94% |
| Czech Republic | 47% | 74% |
| Denmark | 54% | 87% |
| Egypt | 37% | 43% |
| France | 47% | 78% |
| Germany | 43% | 74% |
| Haiti | 60% | 48% |
| Hong Kong | 53% | 100% |
| Hungary | 93% | 68% |
| India | 87% | 30% |
| Indonesia | 67% | 54% |
| Italy | 80% | 68% |
| Kazakhstan | 96% | - |
| Kenya | - | 22% |
| Republic of Korea | 56% | 82% |
| Malawi | - | 19% |
| Malaysia | - | 72% |
| Mexico | 71% | 78% |
| Mongolia | - | 58% |
| Morocco | 62% | 57% |
| Namibia | 69% | 35% |
| Netherlands | 59% | 83% |
| New Zealand | 67% | 87% |
| Nigeria | 10% | 50% |
| Norway | 77% | 78% |
| Pakistan | - | 38% |
| Panama | 66% | 75% |
| Peru | - | 72% |
| Philippines | 80% | 66% |
| Poland | 78% | 61% |
| Romania | 97% | 54% |
| Russia | 81% | 73% |
| Rwanda | - | 19% |
| Senegal | - | 43% |
| Singapore | 87% | 100% |
| South Africa | 62% | 62% |
| Spain | 85% | 77% |
| Sri Lanka | 82% | 15% |
| Sweden | 41% | 85% |
| Switzerland | 40% | 74% |
| Tanzania | - | 26% |
| Thailand | 75% | 34% |
| Tunisia | 78% | 67% |
| Turkey | 81% | 70% |
| Uganda | - | 13% |
| Ukraine | - | 68% |
| United Kingdom | 50% | 90% |
| United States | 65% | 82% |
| Uruguay | 59% | 93% |
| Venezuela | 83% | 94% |
| Vietnam | - | 28% |
| Zimbabwe | - | 38% |
Source: Housing Finance Information Network (HOFINET) [7]
Homeowners are usually required to pay property tax (or millage tax) periodically. The tax is levied by the governing authority of the jurisdiction in which the property is located; it may be paid to a national government, a federated state, a county or geographical region, or a municipality. Multiple jurisdictions may tax the same property.
In most Canadian provinces home purchasers must pay a one-time tax called a Property Transfer Tax (Land Transfer Tax) which is based on the cost of the home.
The Federal Housing Administration (FHA), also known as the Office of Housing within the Department of Housing and Urban Development (HUD), is a United States government agency founded by President Franklin Delano Roosevelt, established in part by the National Housing Act of 1934. Its primary function is to provide insurance for mortgages originated by private lenders for various types of properties, including single-family homes, multifamily rental properties, hospitals, and residential care facilities. FHA mortgage insurance serves to safeguard these private lenders from financial losses. In the event that a property owner defaults on their mortgage, FHA steps in to compensate the lender for the outstanding principal balance.
This aims to be a complete list of the articles on real estate.
Renting, also known as hiring or letting, is an agreement where a payment is made for the use of a good, service or property owned by another over a fixed period of time. To maintain such an agreement, a rental agreement is signed to establish the roles and expectations of both the tenant and landlord. There are many different types of leases. The type and terms of a lease are decided by the landlord and agreed upon by the renting tenant.
A property tax is an ad valorem tax on the value of a property.
Imputed rent is the rental price an individual would pay for an asset they own. The concept applies to any capital good, but it is most commonly used in housing markets to measure the rent homeowners would pay for a housing unit equivalent to the one they own. Imputing housing rent is necessary to measure economic activity in national accounts. Because asset owners do not pay rent, owners' imputed rent must be measured indirectly.
Housing tenure is a financial arrangement and ownership structure under which someone has the right to live in a house or apartment. The most frequent forms are tenancy, in which rent is paid by the occupant to a landlord, and owner-occupancy, where the occupant owns their own home. Mixed forms of tenure are also possible.
A condominium is an ownership regime in which a building is divided into multiple units that are either each separately owned, or owned in common with exclusive rights of occupation by individual owners. These individual units are surrounded by common areas that are jointly owned and managed by the owners of the units. The term can be applied to the building or complex itself, and is sometimes applied to individual units. The term "condominium" is mostly used in the US and Canada, but similar arrangements are used in many other countries under different names.
A housing cooperative, or housing co-op, is a legal entity, usually a cooperative or a corporation, which owns real estate, consisting of one or more residential buildings; it is one type of housing tenure. Typically housing cooperatives are owned by shareholders but in some cases they can be owned by a non-profit organization. They are a distinctive form of home ownership that have many characteristics that differ from other residential arrangements such as single family home ownership, condominiums and renting.
Real estate economics is the application of economic techniques to real estate markets. It tries to describe, explain, and predict patterns of prices, supply, and demand. The closely related field of housing economics is narrower in scope, concentrating on residential real estate markets, while the research on real estate trends focuses on the business and structural changes affecting the industry. Both draw on partial equilibrium analysis, urban economics, spatial economics, basic and extensive research, surveys, and finance.
The affordability of housing in the UK reflects the ability to rent or buy property. There are various ways to determine or estimate housing affordability. One commonly used metric is the median housing affordability ratio; this compares the median price paid for residential property to the median gross annual earnings for full-time workers. According to official government statistics, housing affordability worsened between 2020 and 2021, and since 1997 housing affordability has worsened overall, especially in London. The most affordable local authorities in 2021 were in the North West, Wales, Yorkshire and The Humber, West Midlands and North East.
Equity sharing is another name for shared ownership or co-ownership. It takes one property, more than one owner, and blends them to maximize profit and tax deductions. Typically, the parties find a home and buy it together as co-owners, but sometimes they join to co-own a property one of them already owns. At the end of an agreed term, they buy one another out or sell the property and split the equity. In England, equity sharing and shared ownership are not the same thing.
A real-estate bubble or property bubble is a type of economic bubble that occurs periodically in local or global real estate markets, and it typically follows a land boom. A land boom is a rapid increase in the market price of real property such as housing until they reach unsustainable levels and then declines. This period, during the run-up to the crash, is also known as froth. The questions of whether real estate bubbles can be identified and prevented, and whether they have broader macroeconomic significance, are answered differently by schools of economic thought, as detailed below.
Real estate investing involves the purchase, management and sale or rental of real estate for profit. Someone who actively or passively invests in real estate is called a real estate entrepreneur or a real estate investor. Some investors actively develop, improve or renovate properties to make more money from them.
The homeownership rate in the United States is the percentage of homes that are owned by their occupants. In 2009, it remained similar to that in some other post-industrial nations with 67.4% of all occupied housing units being occupied by the unit's owner. Homeownership rates vary depending on demographic characteristics of households such as ethnicity, race, type of household as well as location and type of settlement. In 2018, homeownership dropped to a lower rate than it was in 1994, with a rate of 64.2%.
A mortgage loan or simply mortgage, in civil law jurisdictions known also as a hypothec loan, is a loan used either by purchasers of real property to raise funds to buy real estate, or by existing property owners to raise funds for any purpose while putting a lien on the property being mortgaged. The loan is "secured" on the borrower's property through a process known as mortgage origination. This means that a legal mechanism is put into place which allows the lender to take possession and sell the secured property to pay off the loan in the event the borrower defaults on the loan or otherwise fails to abide by its terms. The word mortgage is derived from a Law French term used in Britain in the Middle Ages meaning "death pledge" and refers to the pledge ending (dying) when either the obligation is fulfilled or the property is taken through foreclosure. A mortgage can also be described as "a borrower giving consideration in the form of a collateral for a benefit (loan)".
Home ownership in Australia is considered a key cultural icon, and part of the Australian tradition known as the Great Australian Dream of "owning a detached house on a fenced block of land." Home ownership has been seen as creating a responsible citizenry; according to a former Premier of Victoria: "The home owner feels that he has a stake in the country, and that he has something worth working for, living for, fighting for."
A home mortgage interest deduction allows taxpayers who own their homes to reduce their taxable income by the amount of interest paid on the loan which is secured by their principal residence. The mortgage deduction makes home purchases more attractive, but contributes to higher house prices.
Affordable housing in Canada is living spaces that are deemed financially accessible to those with a median household income in Canada. The property ladder continuum of affordable housing in Canada includes market, non-market, and government-subsidized housing.
Affordable housing is housing that is deemed affordable to those with a median household income as rated by the national government or a local government by a recognized housing affordability index. A general rule is no more than 30% of gross monthly income should be spent on housing, to be considered affordable as the challenges of promoting affordable housing varies by location.
The Canadian property bubble refers to a significant rise in Canadian real estate prices from 2002 to present which some observers have called a real estate bubble. The Dallas Federal reserve rated Canadian real estate as "exuberant" beginning in 2003. From 2003 to 2018, Canada saw an increase in home and property prices of up to 337% in some cities. In 2016, the OECD warned that Canada's financial stability was at risk due to elevated housing prices, investment and household debt. By 2018, home-owning costs were above 1990 levels when Canada saw its last housing bubble burst. Bloomberg Economics ranked Canada as the second largest housing bubble across the OECD in 2019 and 2021. Toronto scored the highest in the world in Swiss bank UBS' real estate bubble index in 2022, with Vancouver also scoring among the 10 riskiest cities in the world. By 2023 Canada’s nonfinancial debt exceeded 300% of GDP and household debt surpassed 100% of GDP, both higher than the levels seen in the United States before the 2008 global financial crisis.
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