Low-Income Homeownership: Does It Necessarily Mean Sacrificing Neighborhood Quality to Buy a Home?

Abstract

ABSTRACT:Questions have been raised about the wisdom of low-income homeownership policies for many reasons. One potential reason to be skeptical: low-income homebuyers perhaps may be constrained to purchase homes in disadvantaged neighborhoods. This is a potential problem because home purchases in such neighborhoods: (1) may limit appreciation; (2) may reduce quality of life for adults; and (3) may militate against reputed advantages of homeownership for children. Our study examines the neighborhood conditions of a group of 126 low-income homebuyers who purchased their first home with assistance from the Home Ownership Program (HOP) operated by the Denver Housing Authority. Our approach is distinguished by its use of a comprehensive set of objective and subjective indicators measuring the neighborhood quality of pre-move and post-move neighborhoods. Do low-income homebuyers sacrifice neighborhood quality to buy their homes? Our results suggest that the answer to this question is more complex than it might at first appear. On the one hand, HOP homebuyers purchased in a wide variety of city and suburban neighborhoods. Nonetheless, a variety of neighborhood quality indicators suggest that these neighborhoods, on average, were indeed inferior to those of Denver homeowners overall and to those in the same ethnic group. However, our analyses also revealed that their post-move neighborhoods were superior to the ones they lived in prior to homeownership. Moreover, very few HOP destination neighborhoods evinced severe physical, environmental, infrastructural, or socioeconomic problems, as measured by a wide variety of objective indicators or by the homebuyers’ own perceptions. Indeed, only 10% of HOP homebuyers perceived that their new neighborhoods were worse than their prior ones, and only 8% held pessimistic expectations about their new neighborhoods’ quality of life. Finally, we found that Black homebuyers fared less well than their Latino counterparts, on average, in both objective and subjective measures.