Full Citation

Title: Homeownership and wealth accumulation for low-income households

Citation Type: Journal Article

Publication Year: 2020

ISBN:

ISSN: 10511377

DOI: 10.1016/j.jhe.2019.03.002

NSFID:

PMCID:

PMID:

Abstract: One of the justifications for federal involvement in the homeownership market is that it provides one of the few ways that low-income households can accumulate wealth. To date, the evidence on this claim is mixed due to the lack of a framework that allows for an evaluation of the causal impact of homeownership on wealth accumulation. We make up for this deficit by using the 1984–2013 waves of the Panel Study of Income Dynamics that allows us to use a household-level fixed effects estimator to focus on how wealth changes for households that shift their tenure status from renting to owning. We find that low-income households that were renters in 1984 and first purchased a home in 1989–1999, a period of relatively stable real house prices, experienced significant gains in wealth as of 2011 compared to households that remained renters. On the other hand, low-income households that were renters in 1999 and first purchased a home in 2001–2007, a period of growth followed by the Great Recession, experienced little or no gains in wealth as of 2013 compared to renter households. At least in part, this was due to the unprecedented nature of this housing downturn and the resulting high foreclosure rate among low-income homeowners. Hence, if the Federal Government wants to support its claim, it should assist low-income homeowners in staying in their homes.

Url: https://www.sciencedirect.com/science/article/pii/S105113771730205X

Url: https://linkinghub.elsevier.com/retrieve/pii/S105113771730205X

User Submitted?: No

Authors: Wainer, Allison; Zabel, Jeffrey

Periodical (Full): Journal of Housing Economics

Issue:

Volume: 47

Pages: 101624

Data Collections: IPUMS USA

Topics: Housing and Segregation, Other

Countries: