First-time Homeowners Research Articles

Consumption and Economic Security: A Two-Stage Conceptualization of Sustainable Homeownership in the United States

In the present study, we propose a novel conceptualization of homeownership in the United States as a special commodity, whose consumption involves a two-stage process: homeownership entry wherein the ability to consume is pivotal, and homeownership retention wherein the outcome rests on economic security. Based on the Panel Study of Income Dynamics (PSID), we test this conceptualization with consumption ability being proxied by income and economic security by liquid wealth. Three hypotheses are verified: (1) income predicts first-time renters’ chance of becoming homeowners but has weakened influence on homeownership retention; (2) liquid wealth constitutes the central determinant for first-time homeowners’ ability to avoid going back to renting; and (3) nonliquid wealth fails to exhibit a significant impact on either homeownership stage. By revealing the two separate stages of different homeownership dynamics, this study is the first to systematically explore the built-in contradiction of capitalist housing markets. Policy implications are also discussed.

Middle Class Sensorial and Bottom-Up Condominization in Brazil’s Post-Neoliberal Public Housing

In Brazil’s highly segregated urban centers, geographic location is known for its power to instantiate class positionality. Drawing on long term ethnographic engagements with housing beneficiaries of Brazil’s now revamped Minha Casa Minha Vida, I argue that, in the aftermath of the move, first-time homeowners activate remembrances of the hills (the slums where they lived before) to craft novel classed geographies which defy clearcut isomorphisms of class and space. As the once-rising-poor transitioned from peri-urban informal settlements to middle-class urban environments, the material and sensuous qualities of the hills leaked onto the built environment of the projects in unexpected ways. Yet first-time homeowners also engage in new infrastructural practices that challenge fixed understandings of class subjectivity and distinction—a middle-class-making process I refer to as “bottom-up condominization”—. By foregrounding the sensuous and material aspects of socioeconomic membership in the ruins of post-neoliberalism, I attend to the instability and unruliness of middle-class formations. Rather than an objective identifier for social stratification, the post-neoliberal middle class is best defined through its spectral and fleeting qualities —that is, as a “middle class sensorial”—.

Rooms for Loss: Literature and Healing at Home

In March 2020, I received an email instructing me not to come back to campus to continue my coursework in person. My husband and I had recently bought a 1900 American Foursquare HUD house to restore, exploring our own spatial dimensions as renovators and first-time homeowners of a broken, rundown home we yearned to bring back to life. The interiority of the monastic experience that I loved to read about and research suddenly mirrored my own experience of being a PhD student during a pandemic.Silva Martinez-Falquina uses the term “literary activism” to telegraph how literature has the ability to move people to action. She applies this concept to Louise Erdrich’s 2017 dystopian novel Future Home of the Living God, which is as much about home and belonging as about social fear, oppression, and reproductive rights. Reading about Cedar Hawk Songmaker’s decision to house her baby as the conservative government collects pregnant people for experimentation as my own growing baby kicked the novel’s hard cover from its resting place on my stomach, I circled back to the spatial dimensions of grief and loss, mourning the loss of my own “normal” pregnancy and birth experience. This article is as much an exploration of trauma and literature as a healing mechanism as it is a memoir of my own understanding of home and its iterations during 2020’s incalculable transformations.

Long-distance commuting and real estate investment linked to mining: The case study of Concepción metropolitan area (Chile)

This manuscript discusses a little-studied aspect of mining-related long-distance commutation, such as the real estate investments of its workers in their home cities. Based on surveys conducted with miners and interviews with local experts, this work analyzes this issue specifically in Concepción, Chile. This city would act as a hinge for labor migration, which will translate into a return on investment that would greatly strengthen the housing market. The results indicate that mining emerges as a facilitator of acquisitions for first-time homeowners, something that is linked to public subsidies. This contrasts with the traditional image of miners as large investors and highlights the importance of public policies for the emergence of real estate growth linked to mining in Chilean regions.

Housing equity and household consumption in retirement: evidence from the Singapore Life Panel©

ABSTRACT Housing affordability for elderly homeowners involves an entirely different set of issues as compared to housing affordability for first-time homeowners. To afford to ‘age-in-place’ may require homeowners to access channels that enable them to withdraw their housing equity to finance consumption in retirement. We utilize data from the Singapore Life Panel© survey to empirically investigate the impact of housing equity on the consumption of elderly households. Based on panel analysis, we find housing equity value has no significant impact on non-durable consumption for elderly people. The conclusion holds for a battery of robustness checks. Moreover, heterogeneity analyses based on subsamples by the health condition, the age of household head, the house type, and the number of properties owned also show no significant impact of housing equity on consumption. Finally, we use scenario analysis to study the Lease Buyback Scheme (LBS), a novel housing equity monetization scheme that allows elderly households to unlock housing equity for retirement financing. An individual scenario analysis reveals positive but negligible effects, which may explain the low take-up rate for the LBS.

The Importance of Financial Experience for First-Time Homeowners

We use individual-level data to quantify the effect of getting a mortgage on non-mortgage credit outcomes. We use a regression discontinuity design and find that individuals that transition to homeownership increase their credit card and auto balances by $8,300 and $14,800, suggesting a debt spillover effect from home ownership. This increase in debt is equivalent to 13% of the average mortgage loan, and we provide evidence that it is mainly driven by a change in credit demand. We find that this increase in debt is driven by individuals with higher financial experience, while their overall ability to service their debt remains unchanged. In contrast, low-experience individuals do not increase their debt, but are relatively more likely to experience a deterioration in their financial health. Taken together, these results highlight the role financial experience plays in managing the debt burden associated to a new home.

Education’s big short: learning peonage in American universities

ABSTRACTSome of the biggest debtors in the twenty-first century are not small business owners or first-time homeowners, but rather university students who take out massive debt in the belief that it is an investment in their future. Like housing loans before the Global Financial Crisis, student loan debt is today being packaged and re-packaged into exotic financial products called Student Loan Asset Backed Securities (SLABS). This article details the financialisation of higher education and the emergence of SLABS, primarily through a case study of Pine Capital, a wealth management company, that has successfully shorted the market. Using investment reports and Federal Reserve data from the USA, the article outlines the misaligned incentives and miscalculation of risk that allowed Pine Capital to profit. The article then argues that those who are shorting the education market reveal not only an investment opportunity but also a fundamental challenge to the commonplace thinking about education today: higher education is teaching future generations the practices of debt peonage, a key feature of financial capitalism.

House-ing Urban Kin

In Brazil’s post-neoliberal government, social policies became the bedrock for a new political economy predicated on poverty alleviation via market inclusion. This article draws from long-term ethnographical research conducted among beneficiaries of Minha Casa Minha Vida—Brazil’s largest housing policy. I am interested in the myriad ways policy designs and its contentious operation symbiotically reshape sociability and kin among first-time homeowners. I take a closer look at how ideas and configurations of the family travel across intimate and public domains—from communitarian politics to household economies—and are anxiously negotiated, becoming the indexer of experiential moral systems of care. Transitioning across multi-scalar instances of everyday sociality, I interrogate how such economies conflate with the infrastructures and pervasive imaginaries of the house in the local machineries of the policy.

The Price of Homeowners: An Examination of the First-Time Homebuyer Tax Credit

A major policy response to the 2008 housing crisis was the First-time Homebuyer Tax Credit, worth up to $8,000. To estimate the tax credit effects on homeownership, I construct a quarterly first-time homebuyer time-series using American Housing Survey data. Using both an event-study and a difference-in-difference framework, I estimate the tax credit induced 301,900 first-time homeowners and calculate the government paid $24,180 per additional homeowner. I find no evidence that first-time homebuyers bought more expensive houses or increased default rates. Estimating state and MSA-level effects I find a strong correlation between effect size and average home values, with a doubling in average home values implying a drop in effect size by 19.7 percentage points. These local effects also reveal larger effects in areas with smaller housing busts, had lower mortgage delinquency rates, and have higher housing supply elasticity.

The Pursuit of Sustainability of Homeownership Schemes for First-Time Buyers

A large portion of first-time homebuyers lack adequate means to meet their needs of housing owing to home price inflation in Malaysian cities. One way to address the housing needs of urban household is to provide affordable quality homes. Drawing upon a case study of Greater Kuala Lumpur, Malaysia, this study attempts to discuss the cloud of issues related to different homeownership schemes available for first-time homebuyers. Results suggest that affordable housing should be made available at the price and locations that can be accepted by first-time homeowners. In line with the principle of sustainability, homeownership schemes for first-time homebuyers should be economically viable, socially acceptable and technically feasible.

House prices and birth rates: The impact of the real estate market on the decision to have a baby

This project investigates how changes in Metropolitan Statistical Area (MSA)-level house prices affect household fertility decisions. Recognizing that housing is a major cost associated with child rearing, and assuming that children are normal goods, we hypothesize that an increase in house prices will have a negative price effect on current period fertility. This applies to both potential first-time homeowners and current homeowners who might upgrade to a bigger house with the addition of a child. On the other hand, for current homeowners, an increase in MSA-level house prices will increase home equity, leading to a positive effect on birth rates. Our results suggest that indeed, short-term increases in house prices lead to a decline in births among non-owners and a net increase among owners. The estimates imply that a $10,000 increase leads to a 5% increase in fertility rates among owners and a 2.4% decrease among non-owners. At the mean U.S. home ownership rate, these estimates imply that the net effect of a $10,000 increase in house prices is a 0.8% increase in current period fertility rates. Given underlying differences in home ownership rates, the predicted net effect of house price changes varies across demographic groups. In addition, we find that changes in house prices exert a larger effect on current period birth rates than do changes in unemployment rates.

Home-ownership in Europe: How did it happen?

We use data from the third wave of the Survey of Health, Ageing and Retirement in Europe (SHARELIFE)(1) to document the different ways individuals first became home-owners across countries and over cohorts over the second half of the 20th century. Focusing on first-time home owners we find that younger cohorts became home-owners earlier and were more likely to do it through credit, less likely to inherit their home directly. Having higher human capital, being employed, married, having children and living in an urban area, all make it more likely to purchase a home with a mortgage. The persistence of family help in accessing home-ownership in many countries demonstrates the interrelation between family, market and the state in most of continental Europe.

SUSTAINABLE, AFFORDABLE HOUSING—MOVING TOWARDS ZERO ENERGY

INTRODUCTION In 2010, Rural Development, Inc. (RDI) completed construction of Wisdom Way Solar Village (WWSV), a community of 20 homes (ten duplexes) in Greenfield, MA. RDI was committed to very low energy use and sustainable building practices from the outset as they assembled a committed design and construction team. The team worked together closely to optimize site planning, home design and envelope systems, IEQ strategies, sustainable materials, and HVAC and solar systems. Most of the homes were reserved for low- and moderate-income buyers, and most of the buyers were first-time homeowners. RDI coordinated outreach and training for buyers about the homes' design and advanced systems. The homes' design, orientation, and excellent building envelope allowed for very simple HVAC systems—saving RDI $4,000 or more per home when compared to their standard HVAC systems. All of these building systems—combined with active solar electric and thermal systems—resulted in average gas and electric bills of less than...

Motives for Transfers from Parents to Children: Tests with First-Time Homeowners’ Data

There are good theoretical reasons why transfers from parents are likely to be important around the time of the first home purchase. Transactions costs associated with trading houses make people with increasing income paths prefer to buy a house that is more expensive than what matches their current income. This together with a down-payment constraint make some first-time house owners borrow to the limit and run down liquid assets at purchase thereby making them vulnerable to adverse income shocks. Intergenerational transfers can alleviate these constraints. Moreover, previous papers have suggested that transfers from parents to children are significant exactly around the time where children buy their first home. Using a panel data set issued from Danish administrative registers with information about wealth of a sample of first-time homeowners and their parents, we document that child and parent resources, house value as well as financial resources are correlated. We then go on to test if there are direct parental transfers targeted to the purchase of the house, and in case of an unemployment spell during the years after the purchase where children typically hold little liquid assets. We also test whether children consider parental wealth as part of their own precautionary savings. We do not find strong evidence of any of these hypotheses.

Does Housing Counseling Change Consumer Financial Behaviors? Evidence from Philadelphia

Pre-purchase homeownership counseling is a social service for low- to moderate-income households intent on becoming first-time homeowners. Despite the record number of low- and moderate-income households achieving first-time homeownership over the past decade, there is little research on housing counseling’s effectiveness, in terms of long-term positive financial behaviors. In addition, the research community has traditionally adhered to a proscribed definition of success within programs, which hinders evaluative efforts. This paper examines whether counseled borrowers have experienced financial behavior changes within 5 years after having purchased a home. There were mixed results regarding overall financial behavior changes. Agency identity had little influence on some counselees’ behaviors, while counseling agency characteristics had some limited effects on client behaviors.

Grants for First-time Homeowners in Norway – Distributional Effects under Different Market and Political Conditions

Abstract This paper focuses on first-time homeowner grants for low-income households in Norway. Using evidence from three different years (1984, 1996 and 2005) and from different regions, the analysis examines success in achieving equity goals under different market and political conditions. The empirical results show that grant payments allocated to low-income households are suitable for attaining vertical equity. However, changes in market conditions have created horizontal inequity, since differences in housing prices have not been compensated by differences in grant payments to avoid affordability problems. The recipients have become older and more heterogeneous despite a more targeted policy from 1996 specifically aimed at young people, and in 2005 male recipients were awarded significantly higher grant payments than female recipients.

Family Dynamics and First-Time Homeownership

The transition to first-time homeownership is related to household events such as cohabitation and marriage as well as to parents' homeownership. This paper investigates how these relationships have changed during the last few decades, using the first wave of the Netherlands Kinship Panel Study and event history analysis techniques, including interaction effects with the calendar year. The study finds that singles, cohabiters and those who are just starting cohabitation have become more likely to be first-time homeowners than married people without children. The data did not provide evidence for changes in the importance of the intergenerational transmission of homeownership.

Does Investment Risk Affect the Housing Decisions of Families?

Households assume substantial house‐price risk when purchasing a home. This article investigates the effect of such risk on families' housing decisions. Using a repeat cross‐section of household data from the American Housing Survey spanning a 10‐year period and measures of expected return and time‐varying risk, I find that families are less likely to own and housing demand is reduced during episodes of relatively high, anticipated house‐price volatility. The impact is greater on low‐ and moderate‐income families and first‐time homeowners than other groups. The results hold implications for policies designed to assist homeowners in lessening the risk they bear. (JEL R21, D12, D84)

Household Income, Termination Risk and Mortgage Pricing

The premium embedded in home mortgage loans to compensate investors for their exposure to prepayment risk is a significant component of the cost of home mortgage lending. Moreover, there is some reason to believe that prepayment risk may be lower for loans to lower-income housing borrowers, especially those that are first-time home owners. If so, investor recognition of this advantage should facilitate greater willingness to acquire portfolios of lower-income housing loans, and encourage more competitive pricing in this segment of the market. This study investigates the possibility of differential mortgage prepayment behavior between lower-income home owners and non-low income home owners. The investigation relies on samples of the American Housing Survey spanning ten years of experience from 1985 to 1995. We find no significant difference between the termination or refinancing behavior of non-low income and low-income households. This result is robust to a number of alternative specifications such as restricting the low-income test group to non-moving households and to first-time owners. The same conclusions are derived from both aggregate prepayment rates and from analysis of individual household prepayment behavior.

Unraveling the Real-Payment Twist

Two GROUPS in U.S. society have been particularly hard pressed by inflation: potential first-time homeowners and people in retirement. A major problem for these two groups arises from the failure of financial institutions to provide mortgages and pensions suitable to the current inflationary, environment. The first section of this paper shows that, while the variable-rate mortgage and the shared-appreciation mortgage-two principal innovations in mortgage financing-may meet certain needs of traditional mortgage lenders, they do not address the difficulties that the conventional level-payment mortgage creates for first-time homeowners. The second section illustrates the difficulties that level-payment pensions and annuities create for retirees and contrasts them with indexed pensions. The third section explains how the development of both indexed mortgages and pensions might be encouraged by exploiting the symmetry between them. In important respects, indexed pensions are the mirror of indexed mortgages, so that the creation of one would facilitate creation of the other. With only enabling federal legislation, financial intermediaries and markets should be capable of creating both, thus easing much of the hardship of inflation for major groups in society.