4-14 Homeownership and Wealth
Mortgage Finance, Affordable Homeownership, Impacts of Homeownership
Working Paper | April 2014

Low- and Moderate-income Homeownership and Wealth Creation

Allison Freeman, Roberto G. Quercia
Research funded by Ford Foundation

Researchers compare the change in wealth of a sample of LMI homeowners from 2005 to 2012, which includes the period of the financial crisis, to a sample of LMI renters and find that consistent owners report greater levels of median wealth.

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This paper provides descriptive evidence with which to more fully consider whether homeownership is a reliable wealth‐building mechanism for low‐ and moderate‐income (LMI)
families. It presents an overview of wealth data from the Community Advantage Program (CAP) study, an in‐depth, longitudinal examination of LMI homeowners and renters.

The paper examines changes to the wealth of LMI homeowners from 2005 to 2012 – thereby capturing the period of the financial crisis – and compares these to the changes experienced by LMI renters. In particular, the paper looks closely at changes in the net worth of CAP owners who retained their homes, owners who transitioned out of homeownership, renters who bought a home during the course of the study, and renters who maintained that tenure status since the study began.

Through this detailed comparison, the analysis reveals some interesting findings about the impact of homeownership on the wealth of LMI families. Most importantly, the authors find that consistent owners report greater levels of median wealth than other groups. These differences hold even when groups are matched by pre‐crisis net worth levels, suggesting that there are indeed wealth‐building effects associated with affordable homeownership.



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