Mortgage Finance, Asset-Building & Savings, Affordable Homeownership, Regulation & Reform
Book Chapter | May 2007

The Wealth-Creating Potential of Homeownership: A Preliminary Assessment of Price Appreciation Among Low-income Home Buyers

Chasing the American Dream
Michael A. Stegman, Roberto G. Quercia, Walter R. Davis
Research funded by Ford Foundation

Given strong and enduring market fundamentals and secondary market innovations that have the potential to channel significantly more capital to affordable lending, the mortgage industry will respond to the upsurge in effective demand from households who come to the table with savings in hand, financially ready and able to become successful homeowners.

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Home equity is a significant source of household wealth, especially for those in the lower reaches of the income distribution.  This is why consumer advocates and policy makers celebrate the achievement of a record number of homeowners during the 1990s.

In one chapter of  Chasing the American Dream: New Perspectives on Affordable Homeownership (Cornell Press, 2007), UNC Center for Community Capital researchers discuss the asset-building potential of house price appreciation from an innovative affordable mortgage program, the Community Advantage Program, which enabled homeownership for more than 25,000 credit-worthy low-income, low-wealth individuals not effectively served by the conventional market.

Through access to the proprietary valuation model that the Federal National Mortgage Association (Fannie Mae) uses to value the homes securing its mortgage portfolio, they were able to estimate the paper equity accrued by thousands of families who bought homes under this demonstration program launched by Fannie Mae and Self-Help Credit Union, a North Carolina-based community development financial institution.

Chasing the American Dream provides a critical assessment of affordable homeownership policies and goals. Book contributors represent a variety of disciplinary perspectives and offer a thorough understanding of the economic, social, political, architectural and cultural effects of homeownership programs, as well as their history. Editors William M. Rohe and Harry L. Watson draw together the assessments in this book to prescribe a plan of action that lays out what must be done to make homeownership policy both effective and equitable.

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The UNC Center for Community Capital conducts research and policy analysis on ways to make financial services work better for more people and communities.


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