Clinton Key

Homeownership and Wealth among Low- and Moderate-Income Households

Using data from a set of low- and moderate-income homeowners who received prime mortgages through the Community Advantage Program panel and a matched set of renters, we assess the effect of sustained homeownership on net worth and components of net worth. In this article, our aim is to test the claim that, all else being equal, investing in and maintaining ownership of a home yield higher short-term increases in net worth and other measures of economic well-being than do renting and choosing other forms of investment and consumption. We attempt to isolate the effect of homeownership from the factors that cause both homeownership and increases in wealth using three matching approaches that address sample selection and endogeneity in the data. After balancing renters and owners on observed characteristics and adjusting for influential outlying cases, we find that low- and moderate-income homeowners experience greater short-run increases in net worth, assets, and nonhousing net worth than renters do. These findings are particularly interesting because the period of study coincides with the housing crisis, periods of shrinking home values, and declining equity in the housing market as a whole.

The Effect of Marital Status on Home Ownership among Low-Income Households

This research examines whether married low-income renters are more likely to become home owners than comparable single, low-income renters. To do so, it employs data from the Community Advantage Panel Study and discrete-time survival analysis with propensity-score matching. Results suggest that married couples buy homes at higher rates, and buy them more quickly, than do their unmarried counterparts. Estimates in models that use propensity-score matching are robust to the control of selection bias between the married and the unmarried groups. The findings suggest that efforts to encourage marriage among low-income couples may be associated with subsequent economic mobility through home ownership.

Homeownership, Neighbourhood Characteristics and Children’s Positive Behaviours among Low- and Moderate-income Households

Using data on low-to-moderate-income households in the US Community Advantage Program survey, this paper examines homeownership, neighbourhood characteristics and the interaction between the two on the positive behaviour of children from low- and moderate-income households. To control for potential selection bias and endogeneity problems, propensity score weighting and hierarchical regression are employed to tease apart the effects of homeownership, neighbourhood characteristics and their interaction on child positive behaviour. No effect is found of homeownership or neighbourhood characteristics on children’s positive behaviour when the interaction between the two is not included in the model. However, homeownership was found to have a stronger positive effect on children’s positive behaviour as neighbourhood population density increases and, at approximately 4000 persons per square mile (approximate population density of San Diego, CA), homeownership has a significant positive effect on children’s overall scores on the positive behaviour scale.

The Ten-Year Impacts of Individual Development Accounts on Homeownership: Evidence from a Randomized Experiment

This paper presents evidence from a randomized field experiment to evaluate the longterm impact of an incentive for household saving. We examine the effect on homeownership of an Individual Development Account (IDA) program which ran from 1998 to 2003 in Tulsa, Oklahoma. The IDA program provided low-income households with financial education and matching funds for qualified savings withdrawals, including a 2:1 match for housing down payments. About 90 percent of treatment group members opened IDA accounts, and contributions averaged about

Effects of an Individual Development Account Program on Retirement Saving: Follow-up Evidence From a Randomized Experiment

1,800. Homeownership rates for both treatment and control groups increased substantially throughout the experiment. Prior work shows that from 1998 to 2003, homeownership rates increased more for treatment group members than for controls. We show in this paper, however, that control group members caught up rapidly with the treatment group after the experiment ended, so that the IDA program had no significant effect on homeownership rates among the full sample in 2009 and had no effect on the duration of homeownership during the study period. The program had a positive impact on homeownership rates among those with above-sample median income (

Long-Term Follow-Up of Individual Development Accounts: Evidence from the ADD Experiment

15,840) at the time they entered the program, but not on other subgroups that we tested.

Do Tax-Time Savings Deposits Reduce Hardship Among Low-Income Filers? A Propensity Score Analysis

We examine the 10-year follow-up effects on retirement saving of an individual development account (IDA) program using data from a randomized experiment that ran from 1998 to 2003 in Tulsa, Oklahoma. The IDA program included financial education, encouragement to save, and matching funds for several qualified uses of the saving, including contributions to retirement accounts. The results indicate that as of 2009, 6 years after the program ended, the IDA program had no impact on the propensity to hold a retirement account, the account balance, or the sufficiency of retirement balances to meet retirement expenses.

The Impacts of Individual Development Accounts, Assets, and Debt on Future Orientation and Psychological Depression

This report presents findings from the fourth wave of the American Dream Demonstration (ADD) experimental study of Individual Development Accounts (IDAs). The ADD was a set of 14 privately funded local IDA programs initiated in the late 1990s. It was the first large-scale test of IDAs in the United States and used a variety of research methods in order to learn about IDAs. One of these programs, in Tulsa, Oklahoma, was implemented as a random assignment experiment. This report is based on a 10-year follow study of impacts at the Tulsa site.In total, 1,103 low-income participants were surveyed at baseline and randomly assigned to either the treatment or control group. Treatment group members received access to an IDA as well as financial education and case management. The IDA provided matched withdrawals at a 2:1 rate for home purchase and a 1:1 rate for home repair, small business investment, post-secondary education, or retirement savings. Participants who made the maximum matchable deposits throughout the 3 years of the program could accumulate

Refund to Savings

6,750 (plus interest) for a home purchase or

Individual Development Accounts and Post-Secondary Education: Evidence from a Randomized Experiment

4,500 (plus interest) for the other qualified uses.In examining the five allowable uses, the study finds some impacts of IDAs on education, especially for males, and on home maintenance and repair 10-years after the program. However, we find no impact on homeownership, businesses, and retirement savings in the follow-up study. The positive findings for education and home maintenance and repair may suggest that IDAs are best suited to support asset purchases that can be accomplished incrementally over a period of time. Targeting IDAs for education and home maintenance and repair may be more effective than applying them to “all-or-nothing” purchases like a house.