The foreclosure crisis and economic recession have been unprecedented in modern times.  Millions of households were forced to move from their homes and many others saw precipitous declines in home equity and an increase in vacancies in their local areas.  Moreover, these facts were widely reported in the media so even those who were not directly affected were well aware of them.  Thus, we are interested in understanding how attitudes toward homeownership were affected by these events and whether attitudes changed over time.  We are also interested in understanding whether potential changes in attitudes influenced actual home-buying behavior.  Finally we want to see if specific economic indicators—such as house price indices, stock market indices, unemployment rates, GDP, consumer confidence, etc.— track changes in both attitudes toward homeownership and home purchase decisions better than others. 

The theoretical framework used to guide our analysis is the Theory of Planned Behavior.  This widely used theory suggests that home purchase decisions can be predicted from a renter’s intention to become a homeowner, and that such intentions are influenced by attitudes toward homeownership.

The data used in the analysis comes from the Community Advantage Program (CAP) data set.  Survey participants were lower-income renters from 30 U.S. cities across 20 states.  Of 1,531 baseline renters, 20% purchased homes between 2004-2012. 

The CAPs data are used to assess how renters’ attitudes on (1) the importance of buying a home, (2) norms about owning, (3) the perceived control of being able to buy, and (4) intentions to buy changed between 2004 and 2012 for different demographic groups.  We analyze how these attitudes track several financial indices to better understand which ones are most closely associated with homeownership attitudes. 

We will also present the results of an analysis of actual home purchases among the renters in the CAP sample as of 2004. This analysis will assess the relationship between demographic characteristics, attitudes toward homeownership and the financial indicators on home purchase.    

Preliminary findings suggest that the financial crisis had important influences on renters’ attitudes toward homeownership.  Both attitudes toward homeownership and actual home purchases declined and these declines were most closely related to falling house prices and rising unemployment. 

In the conclusion we will discuss some of the first longitudinal analysis of how the financial crisis impacted both the attitudes toward homeownership and the decision to buy a home.    We will also discuss the influence of economic events and the utility of the Theory of Planned Behavior in understanding the decision to purchase a home.