Social Capital and Homeownership in Low- to Moderate-Income Neighborhoods

Abstract

Abstract This study examined the relationship between homeownership and social capital among low-and moderate-income (LMI) households. Using data from the Community Advantage Panel Study, the authors used propensity score weighting and regression analyses to explore the relationship between LMI homeownership, neighborhood conditions, and social capital. After controlling for several important individual-and neighborhood-level characteristics, the authors found that homeownership is related to greater access to social resources in general but not to social resources within the neighborhood. Instead, resource generation within the neighborhood is largely predicted by neighborhood stability and perceived neighborhood size. Policy implications are discussed. KEY WORDS: Community Advantage Home Loan Secondary Market Program; homeownership; low-income; resource generation; social capital Homeownership has long played an integral role in wealth and asset accumulation, community growth, and the promotion of positive social outcomes for individuals and families in the United States (Retsinas & Belsky, 2002; Rohe & Stewart, 1996; Shlay, 2006). Since the 1930s, government policies such as tax incentives, subsidy payments, and market regulation have promoted homeownership as a vehicle to stimulate economic growth (Carliner, 1988). Since the 1980s, they have also been used to spur community redevelopment and provide improved housing options for low-income families (Shlay, 2006). In light of economic and racial disparities in homeownership rates (Collins, 2002; Herbert, Haurin, Rosenthal, & Duda, 2005; Williams, Nesiba, & McConnell, 2005), recent economic and social policies have focused on promotion of homeownership as a way to provide long-term economic stability and other benefits to low- and moderate-income (LMI) families who may not have benefited from earlier policies. As a result, the rate of entry into homeownership for low-income and minority households has been increasing faster than that for other groups (Belsky & Duda, 2002). Research has supported the belief that the benefits of homeownership, such as life satisfaction and neighborhood stability, transcend wealth accumulation for both homeowners and communities (Rohe, Van Zandt, & McCarthy, 2002), although this body of research has primarily focused on middle-and high-income populations. It is important to examine whether LMI individuals and families also experience the positive benefits of homeownership found for middle-and higher-income households. Furthermore, the recent housing crisis, which has been blamed in part on the expansion of risky mortgages to LMI borrowers, underscores the need for a careful look at the costs and benefits of LMI homeownership. This study focused on one perceived benefit of homeownership: its potential impact on access to social capital. Specifically, using data from the 2007 Community Advantage Program (CAP) panel survey and the 2000 U.S. Census, this study examined the differences in the level of access to social resources between LMI homeowners and LMI renters and what role neighborhood economic and social conditions play in the relationship between resource generation (RG) and homeownership. LITERATURE REVIEW Research has sought to identify externalities of homeownership and the potential social benefits that help determine the overall impacts of promotion of homeownership. Rohe et al., (2002) conducted a critical assessment of the research on the costs and benefits of homeownership and concluded there is evidence of positive benefits of homeownership, but they also cautioned that the potential negative impacts should be investigated further. Numerous studies lend support to the belief that homeownership is related to increased involvement in local organizations, neighborhood stability, local problem solving, and satisfaction (DiPasquale & Glaeser, 1999; Rohe & Stegman, 1994b; Rohe & Stewart, 1996). …