Homeownership Rates Research Articles

The Myth of the Latin American Race Monolith: Notes for Future Comparative Research on Racial Inequality in the Americas

It has become common to compare racial inequality in the United States with a “Latin American” pattern of racial inequality in which egalitarian racial ideologies mask stark socioeconomic inequalities along racial lines. However, relatively few comparative studies exist attempting to analyze variations in degrees of racial inequality in the Americas. To stimulate further research in this area, the following study analyzes census data on racial inequality in unemployment rates, educational attainment, homeownership rates, and income in Brazil, Colombia, Cuba, Puerto Rico, and the United States. The results suggest that while Brazil is similar to the United States in displaying large levels of racial inequality in the areas measured, Cuba and Puerto Rico display significantly lower levels of racial inequality and Colombia falls in between, undermining conceptions of a monolithic Latin American racial system.

Homeownership, Labor Supply, and Neighborhood Quality

This paper provides new evidence on the external neighborhood benefits of homeownership among low-income populations. A natural experiment in Israel generated large changes in neighborhood homeownership rates while holding fixed the residents and housing stock, two primary sources of bias in traditional estimates of homeownership effects. When public housing tenants are given the opportunity to buy their units, eventual buyers significantly increase their labor supply on both the extensive and intensive margins. The effects are felt in the neighborhood: when homeownership rates rise by 10 percentage points due to sales of these public housing units to sitting tenants, prices of neighborhood homes rise by 1.5-2%, reflecting an improvement in neighborhood quality. To address endogeneity in tenants' decisions to buy their homes, we use intertemporal and cross-sectional variation in government-set purchase price discounts, and we find similar results. We discuss the conditions under which these effects may be interpreted as homeownership effects, per se, versus privatization effects. Evidence supports the general relevance of the results for policies that increase homeownership among low income populations using financial incentives.

Legacies of Institutionalized Redlining: A Comparison Between Speculative and Implemented Mortgage Risk Maps in Chicago, Illinois

ABSTRACT How did institutionalized discriminatory lending policies implemented under the guidance of the Federal Housing Administration (FHA)’s mortgage risk maps impact neighborhood trajectories? Have these spatially restrictive credit designations influenced home value, homeownership, and racial segregation? Using the FHA mortgage risk map of Chicago, Illinois, for new loan guarantees as a case study, I measure outcomes between credit zones and compare these risk regions with the Home Owners’ Loan Corporation (HOLC) Residential Security Maps, which represent post hoc measures of mortgage risk and were likely not directly used in loan activities. For areas excluded from FHA loan guarantees, the results suggest a negative impact on home values and homeownership rates and weakly decreased segregation between 1940 and 1980. They also suggest an overcorrection of home values, an undercorrection of homeownership, and an increase in racial segregation in excluded neighborhoods between 1980 and 2010 when these areas may have experienced capital reinvestment. In comparison with the HOLC map, the effects on tracts in Chicago rated worst by the FHA are clearer and suggest a more significant impact during the period of discriminatory mortgage lending.

Mandatory Pension Savings and Long-run Debt Accumulation: Evidence from Danish Register Data

This paper uses two decades of Danish register data at the individual level to show that a 1-dollar increase in pension wealth leads to a 42-cent rise in total debt for a group of low-wage earners. Collective bargaining in the labor market provides time-sector variation in mandatory pension contribution rates, which we exploit in two empirical research designs; an event study and a cross sectional IV-regression model. Both methods demonstrate that the debt rise is accompanied by increased housing wealth and homeownership rates. Together, the empirical evidence indicates that mandatory pension contributions lead to a signi cant increase in net wealth, as well as in gross debt.

Does Student Loan Debt Hinder Community Well-Being?

How the growth in student debt is impacting the well-being of the larger community is explored using U.S. county level data. Using tax return data from the Internal Revenue Service (IRS) we find that higher levels of student debt tends to be associated with lower levels of community well-being. Specifically, lower rates of home ownership, higher rental market stress, lower rates of entrepreneurship and poorer health behaviors. While the decision to take on student debt is an individual decision, local communities are uniquely positioned to help students make decisions around taking on debt and repayment options.

The Effect of Health Insurance Coverage on Homeownership and Housing Prices: Evidence from the Medicaid Expansion

ObjectiveHomeownership as a way of wealth accumulation is important for low‐income people and the U.S. government has implemented policy to encourage homeownership among low‐income people. This article investigates the effects of health insurance coverage among low‐income people on homeownership and house prices.MethodsTo estimate the causal effects of health insurance coverage, we exploit the Medicaid expansion provisions of the Affordable Care Act as a source of exogenous variation in health insurance coverage and use it as an instrumental variable.ResultsUsing county‐level data from 2010 to 2018, this study finds that an increase in health insurance coverage among low‐income people results in an increase in homeownership rates and housing prices for bottom‐tier houses, and the results are robust.ConclusionOur study provides new evidence in supporting that higher shares of population with health insurance could increase both homeownership and house prices.

Investment Housing Tax Concessions and Welfare: Evidence from Australia

We build a general equilibrium overlapping generations model with heterogeneous agents to study the welfare implications of housing investment tax concessions in the Australian housing market . Comparing stationary equilibria, we find that removing these concessions significantly reduces housing investment. This lowers house prices and raises rents and the home ownership rate. The steady state welfare analysis suggests that eliminating concessions leads to a welfare gain of 1.7 per cent, for which increased redistribution is a key mechanism. Along the transition, a majority of households are better off, but younger landlords and landlords with higher incomes benefit the least.

Racial Differences in Mortgage Refinancing, Distress, and Housing Wealth Accumulation during COVID-19

The COVID-19 pandemic exacerbated racial disparities in U.S. mortgage markets. Black, Hispanic, and Asian borrowers were significantly more likely than white borrowers to miss payments due to financial distress, and significantly less likely to refinance to take advantage of the large decline in interest rates spurred by the Federal Reserve’s large-scale mortgage-backed security (MBS) purchase program. The wide-scale forbearance program, introduced by the 2020 Coronavirus Aid, Relief, and Economic Security (CARES) Act, provided approximately equal payment relief to all distressed borrowers, as forbearance rates conditional on nonpayment status were roughly equal across racial/ethnic groups. However, Black and Hispanic borrowers were significantly less likely to exit forbearance and resume making payments relative to their Asian and white counterparts. Persistent differences in the ability to catch up on missed payments could worsen the already large disparity in home ownership rates across racial and ethnic groups. While the pandemic caused widespread distress in mortgage markets, strong house price appreciation in recent years, particularly in 2020, means that foreclosure risk is lower for past-due borrowers now as compared with the aftermath of the Global Financial Crisis and Great Recession. Furthermore, borrowers who have missed payments have significantly higher credit scores now than those who were distressed in the 2007–2010 period, largely due to the widespread availability of forbearance for federally backed mortgages.

Pensions, Income Taxes and Homeownership: A Cross-Country Analysis

This paper studies the role of pensions and income taxes in determining homeownership and household wealth. It provides a cross-country analysis, using tax and pension policy designs in Germany, the US and Australia. These developed nations have similar incomes per capita but very different homeownership rates, with the US and Australia having much higher homeownership compared to Germany. The question is to what extent the observed differences in homeownership are induced by national tax and transfer policies. To that end, we develop a stochastic, overlapping generations (OLG) model with tenure choice. The model is calibrated to Germany featuring German statutory public pension and dual income tax systems, and then applied to study the effects of alternative income tax and pension policy structures. Our simulation results indicate that the US and Australian policy designs have a dramatic impact on homeownership, explaining more than half of the observed differentials. We also show significant macroeconomic effects due to differences in tax and pension policies.

Factors Affecting the Rate of Homeownership in the United States

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The Distribution of Wealth Since the Great Recession

Two things have happened to the wealth of American households since the Great Recession started in 2007. First, the distribution became much more unequal; second, the wealth of the typical family dropped sharply, and, at least through 2016, did not recover. These changes are largely due to the sharp drop in homeownership. From 2007 to 2015, the homeownership rate fell by four and one-half percentage points - over six million families. The proportional decline was similar for all large racial and ethnic categories: White, Black, Hispanic, and other (mostly Asian). For the 60 percent of us who comprise the broad middle class, the equity in our homes is still our most valuable asset, and this is true for those of us whose net worth is around $50,000 on up to those of us who are millionaires; but as of 2016 we were typically 30 percent poorer than we were in 2007.

Household Wealth Trends in the United States, 1962 to 2019: Median Wealth Rebounds... But Not Enough

Median household wealth shot up by 21.2 percent in real terms between 2016 and 2019, as asset prices continued to rebound. However, 2007 still remains the watershed year, and median wealth was down 20.4 percent relative to 2007, though mean wealth more than fully recovered. There was a modest remission in wealth inequality, with the share of the top one percent down by 1.4 percentage points, that of the top 20 percent down by 1.0 percentage points, the Gini coefficient down by 0.008, and the mean wealth of the top one percent also down by 1.9 percent. The homeownership rate finally rebounded a bit, by 1.2 percentage points, to 64.9 percent. The stock ownership rate advanced by 0.4 percentage points to 49.6 percent, though still down from its 2001 peak. Though the mean debt of the middle class rose by 10.7 percent in real terms, the debt-income and debt-net worth ratios remained largely unchanged. The black-white gap in mean net worth remained unchanged, as did the Hispanic-white wealth gap. The wealth of households under age 35 continued to deteriorate in both absolute and relative terms between 2016 and 2019.

The Geography of Housing Subsidies

We investigate the heterogeneous impact of the US federal mortgage interest deduction (MID) on households’ location and tenure decisions. We develop a spatial general-equilibrium model at the county level featuring an endogenous itemization of housing subsidies. We find that repealing the MID decreases homeownership rates more strongly in central areas because owner-occupiers migrate to the countryside. Welfare increases because positive externalities arising from less congested housing markets and undistorted tenure decisions outweigh productivity losses. A MID repeal is preferred to an increase of standard tax deductions as implemented in 2018 by the Tax Cuts and Jobs Act.

Does Homeownership Reduce Crime? A Radical Housing Reform from the UK

“Right to Buy” (RTB), a large-scale natural experiment by which incumbent tenants in public housing could buy properties at heavily-subsidised prices, increased the UK homeownership rate by over 10 percentage points between 1980 and the late 1990s. This paper studies its impact on crime, showing that RTB generated significant reductions in property and violent crime that persist up to today. The behavioural changes of incumbent tenants and the renovation of public properties were the main drivers of the crime reduction. This is evidence of a novel means by which subsidised homeownership and housing policy may contribute to reduce criminality.

Multiple home ownership during market transition in China: longitudinal analysis of institutional factors

Housing reform in China has changed its housing market as the rate of multiple home ownership has increased, causing concerns about housing inequality. Existing studies analysed the influence of institutional and market factors on multiple home ownership, but few examined the changes in institutional factors. The present study aimed to address this research gap and found that households with local hukou, better occupational status or working in units of the party, government or state institutions are more likely to own multiple homes. Furthermore, the study investigated the impacts of institutional factors on multiple home ownership. Changing influences of institutional factors due to progressive reform were noted. Market reform reduced the influence of household registration and work units, whereas the effect of occupational status persists owing to incomplete reform. Progressive reform can lead to asymmetric changes in the role of institutional factors, supporting the coexistence of competing market transition theory and power persistence theory. Policy recommendations and implications are provided finally.

HOMEOWNERSHIP AND HOUSING TRANSITIONS: EXPLAINING THE DEMOGRAPHIC COMPOSITION

AbstractWe document the evolution of homeownership rate across various age groups for the period 1995–2015. We find that variations in the homeownership rates are relatively large for the young, which is mostly driven by renter‐to‐owner transitions. In order to explain these empirical facts, we consider a life‐cycle model featuring housing tenure decisions. Housing is modeled as an indivisible and lumpy investment subject to both loan‐to‐value (LTV) and debt‐to‐income (DTI) credit constraints and transaction fees. Our analysis suggests that variations in the DTI limit play a crucial role in accounting for the uneven behavior across age groups.

Debt relief and slow recovery: A decade after Lehman

We follow a representative panel of millions of consumers in the United States from 2007 to 2017 and document new facts on the long-term effects of the Great Recession. There were about six million foreclosures over this period. Only a quarter of foreclosed households regained homeownership, taking an average four years to do so. This persistent loss of homeownership accounts for most of the decline in the U.S. homeownership rate. Despite massive stimulus and debt relief policies, house prices, consumption, and unemployment remained below precrisis levels in about half of the zip codes in the United States Regions that recovered to precrisis levels took on average four to five years. Regional variation in the extent and speed of recovery is strongly and persistently associated with frictions affecting the pass-through of lower interest rates and debt relief to households.

Understanding the Role of Homeownership in Wealth Inequality: Evidence from Urban China (1990-2018)

Many scholars have evaluated the wealth creation effects of homeownership over different periods and have agreed on the positive role of homeownership. However, there are contradictory mechanisms regarding the impact of homeownership on wealth inequality. Based on panel data from 1995 to 2018, this paper found that the expansion of the homeownership rate was an equalizing force in the distribution of wealth during the era of housing reform from 1995 to 2002, driven by the housing acquisition of low- and moderate-income households (LMI) and middle-class housing conversion. The forces were exogenous and dominated by the redistributive logic. In the post-reform era after 2010, the decline in the homeownership rate led to the concentration of wealth distribution that was driven by the widening wealth gap between owners and non-owners, which was an endogenous market driving force. The result shows that there is an apparent discontinuity in the trends of homeownership and wealth inequality when new immigrants cannot afford the price of housing in the city. The wealth position of the middle and lower class (mainly new immigrant non-owners) was crippled not only by the inaccessibility of housing ownership, but also by the reinforcing effect of the housing price upsurge. This research reveals the differential effects of homeownership on wealth inequality and the policy implications on the redistributive effects of the allocation of housing resources.

Homeownership and Community Involvement: Results From the 2019 Metro Atlanta Speaks Survey

ABSTRACT While the relationship between homeownership and community involvement is mixed and unclear, this study aims to contribute to this debate by further examining the relationship between these two. Using data from the 2019 Metro Atlanta Speaks survey, we find that homeowners and residents with longer community tenure have higher odds of being involved in the community compared with renters in the metro Atlanta region of the U.S. state of Georgia. Among various community activities examined, homeowners are associated with higher odds of participating in parent–teacher association meetings, neighborhood association meetings, and public meetings held by local governments. Because housing needs of and challenges faced by residents are different, a balanced and comprehensive housing policy ensuring safe, decent, and affordable housing options—rental housing and homeownership opportunities—is crucial in stabilizing homeownership rates and in keeping residents in their communities longer.

The reverse mortgage: a tool for funding long-term care and increasing public housing supply in Spain

Population ageing is one of the most significant challenges facing the world in the twenty-first century. Furthermore, people aged over 65 typically have a level of income below the national average, but the homeownership rate among those in this age group tends to be high. Equity release schemes, specifically reverse mortgages, can help cover increased care costs and ensure a reasonable level of income, thus guaranteeing the well-being of older adults. However, this product has not been greatly developed by private entities. If the State were to implement this financial operation through public administrations, it could obtain homes that might then be included in public housing stocks. Thus, our paper aims to contribute to the literature on government-based reverse mortgage systems. Under our assumptions, the results showed that if 313,833 homes were reverse-mortgaged, the investment by the public administration would be around 0.73% GDP, with this being a feasible proposal. This work helps to create alternative methods to finance problems related with the ageing of societies from a public perspective.