Achieving The American Dream: The Impact of Homeownership on Opportunity for Low- and Moderate-Income Individuals

Author: Shannon Van Zandt

Dissertation School: University of North Carolina at Chapel Hill

Pages: 168

Publication Date: January 2003

Availability:
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Access Number: 10844

Abstract:

Homeownership may form a foundation from which low-income and minority households realize other opportunities. Because homeownership is associated with positive outcomes for the average homeowner, it is thought that low- and moderate-income households will receive similar benefits. Yet neither researchers nor policymakers knows much about how homeownership affects low- and moderate-income households.

This analysis of homeownership and opportunity focuses on three aspects of opportunity that homeownership might be expected to affect: perceived opportunity, social resources, and neighborhood quality. Data come from a longitudinal panel survey of adults who have gone through homeownership education in eight cities nationwide. Respondents include both individuals who purchased homes during the course of the study period as well as a control group of continuing renters.

The results indicate that homeownership is associated with differences among dimensions of opportunity. People who bought homes have better perceptions of opportunity, larger social networks, and live in better neighborhoods. Becoming a homeowner, however, is not the cause of differences among these dimensions of opportunity.

Consistently these data show that even before a respondent becomes a homeowner, the levels of the dependent variables were more favorable than for respondents who did not buy homes.

Rather than a catalyst for change, homeownership appears to be more of a benchmark in a person’s or a household’s life course, suggesting that homeownership education and affordable mortgage products may simply accelerate rather than generate new homeowners. If many of those targeted by homeownership promotion efforts will become home owners anyways, any advantages of creating homeowners at earlier stages of their lives may not be cost-effective.

Policies that encourage homeownership are justified by a substantial body of research documenting numerous and significant benefits for most households, particularly wealth creation. The lack of positive findings in this research, however, suggests a closer look at social benefits of homeownership is in order. It may be that researchers and policy-makers are overestimating the breath of homeownership’s impacts and the power of homeownership to change an individual’s life opportunities.

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