A Surprising Factor in Your Kids' Success: Whether You Own or Rent

Family buying vs. renting their home
Family buying vs. renting their home

There's a new study that shows a surprising way parents can encourage their kids' success: Buy a house.

A study by Richard K. Green and Gary D. Painter at the University of Southern California and Michelle J. White at the University of San Diego looked at housing and school data before and after the foreclosure crisis and determined that children of homeowners are 2.6% less likely to drop out of school than children whose parents rent their home.

Not only that, but according to the study, homeownership also reduces the likelihood of a teen pregnancy by 5%.

Renting vs. Owning

The explanation for the link between homeownership and kids, according to the researchers, is that parents who save money for a down payment and who save money to take care of the home are also disciplined in their approach to parenting.

And while the researchers expected to find a bigger difference between homeowners who had made a larger down payment and those with less "skin in the game," the only difference they found was with homeowners who had not made any down payment at all. Buyers who bought a house with no down payment had the same outcomes for their children as renters.

Long-Term Residency

It also turns out that how long you stay in a home -- whether you own it or not -- impacts drop-out rates, but not teen pregnancy rates.

Some researchers anticipated that the stability associated with staying in one home and therefore in one community and one school for a longer time was the explanation for the positive impact on kids. But the results show that owning the home matters, too.

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Children of homeowners with the longest residency in one home were the least likely to drop out of school. Children of homeowners with a shorter tenure were about as likely to drop out as kids of renters who stayed in their home for a longer-than-average time period.

The kids with the highest dropout rates were those whose parents were renters with short residency periods in any one rental. In other words, homeownership helps even in the short term.

The researchers looked at some other factors that might influence educational outcomes and the likelihood of teen pregnancy and their findings are not what you might thing. They found that parents' marital status, income, race and age of the mother when the child was born had little impact. However, in addition to homeownership, the parents' education is a factor that influences a child's educational success.