The drivers of sustainable homeownership

Abstract

AbstractThis article introduces a novel measure of homeownership sustainability—homeownership longevity—and examines patterns of sustainable homeownership across multiple mortgage characteristics from 2012 onward, using a unique and nationally representative data set of first‐time homeowners, the National Mortgage Database borrower sample. Importantly, the unit of observation is the individual borrower and the data track how long each borrower remains a homeowner throughout the sample period. The results show that first‐time homebuyers have remained homeowners at high rates since 2012 with over 60% maintaining homeownership throughout the entire sample period. Although there are statistically significant differences in expected homeownership longevity by loan origination characteristics, the absolute magnitudes of these differences are small. Notably, the disparity among racial and ethnic groups in terms of homeownership longevity is small. The high rates and relative uniformity of homeownership longevity for this population suggest that self‐selection into homeownership and existing underwriting standards have allocated mortgage credit to households highly likely to maintain homeownership.