Homeownership in Disadvantaged Neighborhoods

Federal policy has emphasized the extension of homeownership to low- and moderate-income households in the past two decades based on the belief that such households will receive economic and social benefits as a result. In “Homeownership and Neighborhood Satisfaction among Low- and Moderate-Income Households,” Grinstein-Weiss and her colleagues find evidence to support the notion that homeownership, even in less affluent neighborhoods, may provide certain social benefits.

However, the authors also find that living in a neighborhood characterized by economic disadvantage is negatively associated with neighborhood satisfaction. As such, the authors recommend that, where neighborhood satisfaction is the policy goal, programs supporting homeownership in lower-income communities should operate concurrently with neighborhood revitalization efforts.

Homeownership traditionally requires regular mortgage payments in order to build home equity over time, and so is associated with financial stability. Homeownership has also been associated with social outcomes such as educational achievement, positive parenting behavior, social involvement, and life satisfaction. However, since low- and moderate-income homeowners are more likely to purchase homes in distressed neighborhoods, they may receive fewer economic returns than higher-income households which are able to purchase homes in less distressed neighborhoods.

While it is true that households which are constrained by lower incomes have limited purchasing options, homeownership was found to predict increased neighborhood satisfaction despite economic disadvantage. Indeed, low- and moderate-income homeowners reported positive ratings when asked “How would you rate your neighborhood as a place to raise children?” 1.6 to 2.3 times more frequently than low- and moderate-income renters.

Higher levels of neighborhood satisfaction are associated with place attachment, which may further enhance homeowners’ active involvement in civil and social activities in their neighborhood. Furthermore, place attachment serves to preserve and sustain investment in neighborhoods in times of stress. Moreover, heightened neighborhood satisfaction may bolster property values and increase neighborhood stability.

Ultimately, neighborhood satisfaction may enhance outcomes for low- and moderate-income households and their communities, highlighting the importance of dually focused efforts that incorporate neighborhood revitalization efforts into efforts to increase homeownership for lower-income households.

Charlie Barlow
Charlie Barlow is a 2012 MA graduate of the Harris School of Public Policy. He is interested in urban economics and public housing.

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