Panel Paper: Do Homeownership and Housing Subsidies Protect Minorities Against Material Hardship?

Thursday, November 7, 2013 : 10:05 AM
Thomas Boardroom (Westin Georgetown)

*Names in bold indicate Presenter

Robert Lerman and Sisi Zhang, Urban Institute
In a normal economic downturn, homeowners with low mortgage payments might be expected to weather the downturn and limit the experience of economic hardship by drawing on home equity and by paying lower housing costs than renters. However, the dramatic declines in home values that accompanied the Great Recession have wiped out large amounts of equity and left many grappling with how to keep up payments on their homes. Stories in the media highlight the hardships experienced by homeowners threatened with losing their homes and former homeowners who lost their homes. The broader issue is whether homeownership or another housing status nevertheless helped families avert material hardship and major losses in employment and income.  This paper examines the interaction between housing tenure and how well minority and low-income families have coped with the Great Recession through early 2012. Using the 2008 Survey of Income and Program Participation (SIPP), we analyze losses in employment and incomes well as the experience of material hardship among families across races and ethnicities.  The focus is on the impacts of housing status (underwater homeowners, abovewater homeowners, renters without subsidy, and subsidized renters). Initial findings suggest that owning a home is associated with lower incidence of economic hardships, even after controlling for various economic and social factors. This knowledge is important as policymakers rethink the role of homeownership for minority and low-income families and attempt to improve the way families accumulate and retain assets and cope with financial emergencies.