Policy Brief | June 2014
Low‐ and Moderate‐income Homeownership and Wealth Creation
Center researchers examine changes in wealth among low- and moderate-income homeowners and renters from 2005-2012 and find clear evidence that, despite losses experienced by the homeowners during the crisis, they fared significantly better than renters.
The foreclosure crisis decimated American wealth, particularly housing wealth. From 2006 to 2011, home equity held by U.S. households fell by $7 trillion – an average of $61,277 for every homeowner household.
The losses hit low- and moderate-income (LMI) households particularly hard, since their wealth is disproportionately concentrated in their homes. That has reenergized the debate over whether homeownership remains a reliable wealth-building mechanism for LMI families.
In “Low- and Moderate-income Homeownership and Wealth Creation,” center researchers Allison Freeman and Roberto G. Quercia examine changes in wealth among 46,000 LMI homeowners and a comparable group of renters from 2005 to 2012. They find clear evidence that, despite the losses experienced by LMI homeowners during the crisis, homeowners fared significantly better than renters.
Researchers conclude that homeownership remains an effective wealth-building tool, providing homeowners with financial benefits not available to renters.