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New study challenges benefits of homeownership in a bad economy

Published: Thursday, Sept. 3 2015 7:45 p.m. MDT

This Feb. 8, 2012 photo, shows a for sale sign in front of a home, in Yardley, Pa. The average rate on the 30-year fixed mortgage jumped after standing pat for three straight weeks at record lows. But the rate stayed below 4 percent for the 12th straight week, keeping home-buying and refinancing attractive for those who can qualify. (AP Photo/Alex Brandon) (Alex Brandon, AP) This Feb. 8, 2012 photo, shows a for sale sign in front of a home, in Yardley, Pa. The average rate on the 30-year fixed mortgage jumped after standing pat for three straight weeks at record lows. But the rate stayed below 4 percent for the 12th straight week, keeping home-buying and refinancing attractive for those who can qualify. (AP Photo/Alex Brandon) (Alex Brandon, AP)

A new study released this month by the nonpartisan Peterson Institute for International Economics challenges previously conceived notions of the benefits of homeownership.

According the study, the five states with the largest increase in homeownership from 1950 to 2010 — Alabama, Georgia, Mississippi, South Carolina and West Virginia — had a 2010 unemployment rate that was 6.3 percentage points higher than in 1950.

Further illustrating the point, the study also found that the unemployment rates in the five states where homeownership went up the least — California, North Dakota, Oregon, Washington and Wisconsin — rose 3.5 percentage points during the period.

Economists David G. Blanchflower of Dartmouth and Andrew J. Oswald of the University of Warwick in England conducted the study, which they say may indicate that areas with high levels of homeownership are more likely to stifle innovation and job creation because of consequences that typically result from homeownership, such as zoning laws and lower labor mobility.

As Floyd Norris of The New York Times was quick to point out, the study does not claim that homeowners are more likely to lose jobs than are renters.

JJ Feinauer is a graduate of Southern Virginia University and an intern for the Moneywise page on DeseretNews.com. Email: jfeinauer@deseretdigital.com, Twitter: @johnorjj.

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