Property Ownership and Wealth

Posted by on Thursday, December 27th, 2012 at 11:19pm

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A basic economics class will teach that the wealth of a people is based on their efficient use of available resources.  Land is a scarce resource because we can’t make anymore of it. For millions of Americans, owning a piece of land with a home on it instills a sense of pride, accomplishment and security.  Even today, home ownership is synonymous with “the American Dream.”  Reports by the National Association of Realtors and researchers provide compelling evidence of the social benefits of homeownership including boosting the educational accomplishments of children, improved health care outcomes and lower crime rates. So, we have great data in support of homeownership.  But, why does it matter?  What is it about property ownership that drives so much of our lives and economy?  I’ll tell you.  It is about a system of proof.  Americans along with 129 other countries in the world have legal systems in place to provide for proof and protection of ownership rights.

Renowned property rights champion and President of the Institute for Liberty and Democracy, Hernando de Soto describes in his documentary “Commanding Heights” why he believes that capitalism works in the West, but not in many poor countries throughout the world. People are “locked out” of the benefits of capitalism because they do not live where there is an organized system of law that provides for proof of identity and proof of property ownership.  To participate in the world economy a country must have a legitimate identity system in place so citizens can travel, apply for loans or obtain credit to build businesses.  Underdeveloped or corrupt countries can be left out of the global economy and loose ground on the gaps in wealth due to the lack of such a legal system.  Without a trusted system in place to prove and protect property rights (real estate and other), there is nothing in place to establish value.  For instance, lets say you buy a piece of land from a neighbor in a country without a proper legal system.  Your word is all that you have to prove you own the land. You could go ask the guy who sold it to you and even if he agrees, a squatter could come along any day and claim that he just bought the land and he now he owns it.  That might sound really “out there” to Americans but it is a reality in approximately 66 countries in the world.  There are no loans to buy real estate because no lender would take the risks without protections.  And what about building a manufacturing plant, or a hotel, or investing in a farm to grow crops for sale?  Investors beware.   

It is amazing to me that the simple concept of individual property rights can make such a difference in the quality of life for people.  So please do not take for granted this amazing and wonderful gift.  We have the rich blessing to be able to buy and sell land and property within a system that documents our ownership, protects our rights, and allows us to build wealth. It is not perfect and not without risks, but it is marvelous.

Get started today on owning your piece of the American Dream.  Call Dina at 858-361-3197. Serving buyers and sellers in San Diego county, CA.

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