The Influence of Household Formation on Homeownership Rates across Time and Race

Homeownership rates equal the number of households that own homes divided by the number of households in the population. Differences in the propensity to form a household, therefore, may contribute to changes in homeownership rates over time in addition to longstanding racial gaps in homeownership. We examine these issues on an age-specific basis using data from the 1970 to 2000 public use micro samples (PUMS) of the decennial census. Results indicate that lower headship rates tend to reduce homeownership rates. This pattern is most notable for individuals in their early and mid-20s. For these individuals, declining headship rates between 1970 and 2000 reduced homeownership rates by 3 to 5 percentage points. Moreover, year-2000 African American headship rates narrow white-black gaps in homeownership by roughly three percentage points, while year-2000 Hispanic headship rates widen white-Hispanic gaps in homeownership by two to three percentage points. Thus, controlling for differences in headship behavior, white-black homeownership gaps are somewhat more severe than previously recognized, but the reverse is true for white-Hispanic gaps.Household headship, Household formation, Homeownership rates, Racial gap in homeownership, Black-white differences

Measuring the Delivery Costs of Prepurchase Homeownership Education and Counseling

In order to understand the roles that public policy and the business and consumer sectors play in paying for homeownership education and counseling, the costs, benefits and beneficiaries of the education and training must be fully accounted for. This paper estimates the total costs of delivering homeownership education and counseling and discusses proven and implied benefits to stakeholders. Based on one set of assumptions, and depending on the level of activities offered, homeownership education and counseling costs range from $500 to$1,500. Empirical and anecdotal evidence suggest that homeownership education and counseling offer important benefits to borrowers, lenders, real estate professionals and communities. Many nonprofit organizations providing such services, however, remain underfunded. Providers, financial institutions and policy makers must increase their knowledge of what works, what costs are incurred, who benefits, and what value is created by homeownership education and counseling activities in order to develop a sustainable delivery system.This paper uses information from NeighborWorks organizations that offer homeownership education and counseling programs as illustration of the cost structure of the homeownership education and counseling industry. Part 2 provides background information on the homeownership education and counseling industry. Part 3 explains the methodology and assumptions used for this analysis. Part 4 reviews cost accounting and presents a framework for the cost analysis. Part 5 discusses the value proposition for homeownership education and counseling while Part 6 offers conclusions and implications

Homeownership

We develop a dynamic stochastic equilibrium model of two locations within a city where heterogeneous households make joint location and tenure mode decisions. To investigate the effect of homeownership on equilibrium prices and allocations, we compare the response of this model economy to a labor shock with that of a rental-only version. This comparison yields three results. First, homeownership enables more households to remain in the more desirable location at the expense of newcomers. Second, homeownership adds to the volatility of the housing market. Third, homeownership may amplify the dispersion of household income within a location. Homeownership raises distributional issues. The households who consume the most housing gain the most from the ability to own their home. Newcomers to the city are the main losers

The Many Benefits of Homeownership

This popular article from the NeighborWorks Campaign for HomeOwnership reports on research confirming that homeownership is good for families, neighborhoods and the econom

Impacts of Homeownership Education and Counseling on Homebuyer Purchasing Power: Summary of Findings

In addition to reducing defaults and foreclosures, homeownership education and counseling is often claimed to help families achieve homeownership in the first place by helping them to navigate the homebuying process, improve their credit, and access favorable financing products. This study tests an approach to quantifying this benefit by estimating the amount of increased purchasing power that results from homeownership education and counseling. While the results are preliminary, they provide early suggestive evidence that high-performing homeownership education and counseling agencies may provide quantifiable benefits that exceed their costs of assistance. The study also makes recommendations for how data could be collected on a more systematic basis to track and assess these benefits

Improving Homeownership Among Poor and Moderate-Income Households

Looks at rates of homeownership, trends in federal low-income rental housing assistance, and types of homeownership programs for low-income households

Pursuing the American Dream: Homeownership and the Role of Federal Housing Policy

Homeownership has always been a strong component of housing and housing policy in the United States. Owning a home is considered an important social and economic indicator, as well as a symbol of having a stake in society and contributing to the stability to the community. The system for producing housing units suitable for homeownership, and for financing home mortgages, has changed dramatically in recent decades. Technology and innovations have increased speed, efficiency and volume, resulting in more families finding mortgage financing than ever before and new homes being produced in record numbers. While homeownership rates are near all-time highs, particular demographic and economic populations, as well as distressed areas, lag behind. Despite greater access to mortgage credit for most families and communities, increased risks, and higher costs of credit, are being shouldered by consumers.This paper attempts to provide an overview of U.S. housing policies related to homeownership, an analysis of the barriers to homeownership, and background on pressing federal policies, programs, and regulations that could be refined to better support homeownership. As the Millennial Housing Commission considers recommendations regarding federal homeownership policy, several issues are paramount:1. What more can the federal government do to encourage and support homeownership?2. What can the federal government do to encourage innovations in the mortgage market, while adequately protecting consumers?3. What can the federal government do to help ensure that mortgage borrowers understand the rights and responsibilities of homeownership and are prepared to assume them?4. What can the federal government do to encourage the production and preservation of homes affordable to those with lower-incomes?Buying a home is typically the largest and most complicated financial commitment most households ever make. Would-be first-time buyers face many barriers to qualify for a conventionally-priced mortgage, including an inability to afford monthly payments, lacking sufficient savings for a downpayment and closing costs, having high debts or an unstable income. Even if they qualify, potential buyers may be hampered by a lack of affordable homes in a desirable area, or even information on how to buy a home or negotiate the best deal. Veiled or overt discriminatory practices still employed by some in the real estate and financial industries also conspire against some potential homebuyers. In combination, these hurdles, especially among low-income and minority populations, keep homeownership, and its ancillary social and economic benefits, out of reach.Policy makers and practitioners should understand the risks and implications of expanding homeownership to lower-income families. Unlike in the rental housing market, individual families must be able to successfully maintain their homes and their mortgages. Individual households need to have the capacity to stay current on their loans and to undertake needed repairs and upkeep. When families fail at homeownership, entire neighborhoods can be affected in addition to the substantial losses individual households must endure. To the extent that expanding homeownership to low- and very-low income people is a priority, correlated issues of access banking services, personal financial management and education policy must be considered.Based on interviews with leading practitioners, focus groups and other research, a series of policy changes are explored. Generally, policy prescriptions can be grouped into three categories:1.) Expanding the reach of mortgage markets for sustainable homeownership;2.) Educating and protecting consumers engaged in mortgage and home equity markets; and3.) Producing and preserving units suitable for affordable homeownership

America's Second Housing Boom

Reviews trends in the U.S. housing market, including homeownership rates, prime and subprime mortgages, and mortgage denial rates by race/ethnicity; and studies on the benefits of homeownership. Discusses implications and recommended policy measures

Housing policy and the social benefits of home ownership.

In the second article, "Housing Policy and the Social Benefits of Homeownership," Ed Coulson states that the major subsidies to homeownership arise from the U.S. tax code, and the costs of these subsidies are high. Coulson asks whether the social benefits from homeownership are sufficient to warrant such subsidies. To answer the question, he reviews the research on the social benefits of ownership and some related issues. The evidence indicates that homeownership does carry substantial social benefits, but their dollar value remains uncertain.Housing

Promoting Homeownership Among Low-Income Households

Argues that the current system of low-income housing assistance is strongly biased against homeownership. Examines the performance of past housing programs and implications for the future design of efficient low-income homeownership programs