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August 12, 2013 at 6:43 AM

Homeownership in the United States versus Canada

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A U.S house, larger than its counterpart in Canada
(AP Photo/Donna Mcwilliam, 2006)

In the mid-1990s I wrote an opinion column arguing against the tax deduction for mortgage interest. One of the arguments I made was that the percentage of homeowners was only one or two points higher in the United States than in Canada, which doesn’t have the deduction.

The best information I have now is that those rates are exactly the same: 65 percent of households in either country are owners. The U.S. figure is current, and is from the Census Bureau. The Canadian figure is from 2008, and is from Statistics Canada.

Canada is on the verge of coming out with new housing statistics, so the 65 percent figure may change a bit. But the share of people owning houses (or condos) in the two countries has been almost the same for decades, which suggests that the U.S. income-tax deduction has little effect on the rate of homeownership.

It probably affects a second thing, and it definitely affects a third thing.

The second thing is the size of the unit. Canadian homes are smaller, perhaps because more are townhouses or condos. The average size of new homes built in 2009, was 1,428 square feet in Canada and 2,164 in the United States, according to industry sources. The same source put average floor space per person at 779 square feet in Canada and 832 square feet in the United States. Both were high compared with Europe and Asia.

The third thing is debt. Canadians pay off their mortgages faster. That was true in the 1990s and it is true today. According to Zillow, 29% of U.S. houses are mortgage-free.  Statistics Canada says 43 percent of Canada’s homeowner households are mortgage-free. (In both countries these figures are lower than they used to be.)

Bottom line: having a tax deduction encourages Americans to buy bigger houses (and condos) and pay them off more slowly, but not to change the likelihood that they will own their housing.

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