Group Title: Affordable housing issues
Title: Affordable housing issues ; vol. 11 no. 3
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 Material Information
Title: Affordable housing issues ; vol. 11 no. 3
Series Title: Affordable housing issues
Physical Description: Serial
Language: English
Creator: Shimberg Center for Affordable Housing
Publisher: Shimberg Center for Affordable Housing
Place of Publication: Gainesville, Fla.
Publication Date: April 2000
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Bibliographic ID: UF00087009
Volume ID: VID00008
Source Institution: University of Florida
Rights Management: All rights reserved by the source institution and holding location.


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M.E. Rinker, Sr., School of Building Construction College of Architecture PO Box 115703, University of Florida, Gainesville, FL
32611-5703 TEL: (352) 392-7697 SUNCOM: 622-7697 FAX: (352) 392-4364 e-mail: AFFHSNG@NERVM.NERDC.UFL.EDU

Volume XI, Number 3

April 2000

The Research Institute for Housing America is a Washington-based independent research organization
founded in 1998 by the Mortgage Bankers Association of America. The Institute is dedicated to objective,
credible research on how to increase housing opportunity particularly for underserved populations and
communities. In addition to conferences and other programs, the Institute disseminates practical
information through its publications.
The first publication in its Working Paper Series was published in May 2000 under the title, The Social
Benefits and Costs of Homeownership: A Critical Assessment of the Research. The paper was authored
by William H. Rohe, Shannon VanZandt, and George McCarthy of the Center for Urban and Regional
Studies at the University of North Carolina. Presented below, with the permission of the Institute, is a
summary of that first Working Paper plus a complete reproduction of its Conclusions section.
Interested readers are encouraged to contact the Institute for a free copy.

The Introduction to the report points out that the
federal commitment to and subsidy of home
ownership has often been justified by claims that
homeownership has a variety of benefits both to
individuals and to society as a whole. These benefits
appear in the National Homeownership Strategy in
two passages:
Homeownership is a commitment to
strengthening families and good citizen
ship. Homeownership enables people to
have greater control and exercise more
responsibility over their living environ
Homeownership is a commitment to
community. Homeownership helps
stabilize neighborhoods and strengthen

communities. It creates important local
and individual incentives for maintaining
and improving private property and
public spaces.
The authors, however, seek to understand what
evidence exists for these claims. Are the claims
based on "conventional wisdom" or on sound
empirical research? What about the costs of
homeownership? Is there a downside to home
ownership that is ignored in the rush to support
This report is the first of two Institute for
Housing America reports that examines the benefits
and costs of homeownership. The social impacts are
addressed in this report while the subsequent report
will address economic impacts.



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The report begins with an investigation
of the different attributes of homeowners and
renters in order to establish a baseline for
comparing the social impacts of ownership
between the two groups. The authors
summarize the attributes of homeownership
that are thought to result in various social

Social impacts are divided into those that
impact individuals and those that impact
society. Within the individual impacts, the
authors discuss satisfaction, psychological
health, and physical health. The discussion
of societal impacts focuses on neighborhood
stability, social involvement, and socially
desirable behaviors.

The following sections are excerpts from
the Conclusion of the report.

Evidence exists for a variety of positive
social impacts to both individuals and to society
stemming from homeownership. This evi-
dence, however, is stronger for certain social
impacts and weaker for others. Considerable
evidence suggests, for example, that home-
owners are more likely to be satisfied with their
homes and neighborhoods, more likely to
participate in voluntary and political activities
and more likely to stay in their homes longer
periods of time. There is still some doubt,
however, whether these relationships are
causal, since most of the studies do not ade-
quately account for the self-selection of
households to owner and renter occupancy. It
may be, for example, that people who plan on
staying in an area longer buy homes rather than
that homeownership causes people to stay
longer. More will be said about this below.

Evidence on the impact of
homeownership on other social variables is
sparser and, in come instances, less consistent.
Some evidence suggests that homeownership
leads to increased self-esteem except for those
buying in neighborhoods with dilapidated
housing, social problems, and poor reputations.
The limited amount of evidence on the
relationship between homeownership and life
satisfaction tends to support a positive
relationship. Similarly, the limited amount of
research on homeownership and health points
to a positive association as long as the home-
owners are current on their mortgage
payments. The mechanism through which
homeownership affects health, however, has
not been clearly identified. Finally, the
research on the impact of homeownership on
both perceived control and socially desirable
behaviors is simply too sparse to draw even
tentative conclusions at this time.

The research on potential negative social
impacts of homeownership is sparse. There is
one British study that suggests that those who
are behind on their mortgage payments suffer
negative health consequences (Nettleton and
Burrows 1998). There is also some evidence
that homeowners are less likely to move from
high-poverty areas, although the consequences
of this are not clear. We were unable to find
any research on such potentially important
topics as the impacts of mortgage payment
delinquency or default on self-esteem, sense
of control, life satisfaction, and other social





Public policy that encourages
homeownership has often been justified by
claims that it has a variety of benefits both to
individuals and to society. Our review of the
research literature suggests that there is
considerable, although not irrefutable, evidence
for several of those claims. The weight of the
research evidence is that homeownership is
associated with neighborhood stability and
participation in voluntary and political
activities. Given these benefits, there is
justification for public policies that encourage
and support homeownership. Whether the
costs of these policies are reasonable given the
anticipated benefits is a separate question that
is beyond the scope of this report. The research
on the impact of homeownership also suggests
that these benefits may not accrue to all
homeowners. Those who buy homes in less
desirable neighborhoods or in housing markets
that experience depreciation may not realize
the economic or the social benefits of
homeownership. Moreover, some home-
owners may desire to move, but find
themselves stuck in homes that they cannot
sell. In still other instances, homeowners may
have difficulty keeping up with their mortgage
payments, and this may lead to economic and
possibly health problems due to difficulty
meeting mortgage payments or, in the worst
cases, mortgage default.

The possibility of these negative impacts
suggests that those involved in promoting
homeownership should be careful not to
oversell homeownership, particularly among
those who are less likely to be successful
homeowners. Recent public policy has been
focused on making homeownership available

to lower-income families. Although this is
clearly an important and worthy goal, not
everyone is capable of becoming a successful
homeowner. As Rohe and Stewart (1996) note:
"Encouraging families with highly variable or
even flat income trajectories to purchase
dwelling units is counterproductive: They are
unlikely to be able to afford them over the long
run. Encouraging low-income families to
purchase units that they will not be able to
maintain at a reasonable standard is also
harmful [to the larger community]" (p. 73).
Homeownership counseling may help lower-
income home buyers be successful home-
owners, but at this point there is very little
research evidence on this topic. Thus, caution
needs to be exercised in encouraging home-
ownership among those with a relatively low
probability of success. We do a great disservice
if we encourage persons to buy homes that they
will end up losing.

Similarly, caution should be exercised in
encouraging households to purchase homes in
areas that do not have a reasonable probability
of stable or increasing property values and
healthy social conditions. Many neighborhood
revitalization programs adopt homeownership
as the central element of their revitalization
strategy. They focus their efforts on increasing
the homeownership rate in the target area.
This is fine as long as other investments in
infrastructure and services result in a neighbor-
hood that is a desirable place to live.
Otherwise, the homebuyers may not realize
either the economic or social benefits of
ownership. If people buy in areas character-
ized by depreciating property values and
serious social problems, the American Dream
could turn into the American Nightmare.


Inquisitive readers are encouraged to
request a free copy of the complete report and
to request that they be placed on the mailing list
for future publications.

Mailed requests may be sent to:

Research Institute for Housing America
1919 Pennsylvania Avenue, NW
Suite 775
Washington, DC 20006-3438

Publications may also be ordered on the
Institute's web site:

Two references are cited in the Conclusion
section of the report:

Nettleton, S., and R. Burrows. "Mortgage
Debt, Insecure Home Ownership and Health:
An Exploratory Analysis," Sociology of Health
and Illness, 20, No. 5 (1998): 731-753.

Rohe, W.M. and L. S. Stewart. "Home
Ownership and Neighborhood Stability,"
Housing Policy Debate, 7, No. 1 (1996): 37-81.

or by telephone at: (202) 557-2876.

Affordable Housing ISSUES is prepared bi-monthly by the Shimberg Center for Affordable Housing for the purpose of
discussing contemporary issues facing affordable housing providers. Reproduction of this newsletter is both permitted and
encouraged. Comments or questions regarding the content are welcome and should be addressed to Robert C. Stroh, Director.

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