Using Housing Policy to Enhance the Sustainability of Low-Income Homeownership and Improve Neighborhood Quality of Life

Purpose: Federal housing policy has for many generations encouraged homeownership as an anti-poverty and asset building tool. Since the 1980s, these policies have explicitly extended this encouragement to households of ever-lower incomes. However, the explosion of home foreclosures during the past few years has raised questions about the wisdom of these low-income homeownership policies. Of particular concern is the ability of low-income homebuyers to (1) attain and sustain homeownership; (2) accrue assets through home appreciation; and (3) improve neighborhood quality. Using longitudinal data from the Denver Housing Study, we examine the extent to which sustainability of low-income homeownership and improvements in neighborhood quality of life may be attributed to participation in HOP.

Methods: Using a quasi-experimental design, we assessed the impact of a pre-purchase homeownership counseling program on enhancing the sustainability of low-income homeownership as well as neighborhood quality of life. Our sample consists of 384 low-income homebuyers who purchased their first homes between 1994 and 2007:126 who purchased with assistance from the HOP and a control group of 258 who purchased without this assistance. These homeowners are part of the Denver Housing Study, a longitudinal study tracking the ways in which participation in such homeownership programs foster the acquisition of human, financial and social capital assets of adults and children living in low-income households. Data used in the study include quantitative and qualitative data gathered from interviews with homeowners, administrative and real estate transaction data, systematic social observations of local neighborhood conditions, longitudinal census tract and neighborhood data for the City and County of Denver obtained from the Neighborhood Change Database and the Piton Foundation's Neighborhood Facts Database, respectively. Differences in means tests were employed to describe pre- and post-purchase changes in homeownership, appreciation and neighborhood quality. To estimate program effects, we employed a “difference in differences” statistical model in which changes in homeownership sustainability and neighborhood quality pre- and post-purchase were compared between HOP and non-HOP homebuyers.

Results: Our analyses revealed that for both HOP and non-HOP homebuyers, post-purchase neighborhoods were superior to the ones they lived in prior to homeownership. However, the gains made in neighborhood quality were significantly higher for HOP homebuyers. Moreover, there were significant differences in the sustainability of homeownership between HOP and non-HOP homebuyers: foreclosure rates were approximately two times higher for non-HOP homebuyers. Average annual home appreciation rates for HOP homebuyers were significantly higher (7.9%) than those for non-HOP homebuyers (5.6%). Finally, we found that program effects remained significant after controlling change in respondent and household characteristics.

Implications: These data suggest that participation in pre-purchase homeownership counseling programs can increase sustainability of homeownership and improve quality of life for low-income homebuyers. We discuss implications for community interventions with low-income homebuyers as well as housing policy.