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The sustainability of low-income homeownership: the incidence of unexpected costs and needed repairs among low-income home buyers

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  • Shannon Van Zandt
  • William M. Rohe

Abstract

Until the recent housing market crisis, the United States was producing first-time, low-income homeowners at an unprecedented rate. In a longitudinal study of low-income renters participating in a multi-site homeownership education program, we examine the ability of low-income homebuyers to pay housing related costs after home purchase, including maintenance or repairs costs. After less than two years of ownership, we find the sustainability of low-income homeownership in jeopardy for sizeable portion of home buyers. About half of the more than 350 new home owners surveyed face unexpected costs, and about a third confront home repairs they cannot afford. More than half carry greater non-housing debt, and about a quarter were 30 days late or more in debt repayment. The findings raise concerns about the long term sustainability of low-income homeownership and emphasize the importance of requiring effective pre-purchase services and effective and ongoing post-purchase counseling.

Suggested Citation

  • Shannon Van Zandt & William M. Rohe, 2011. "The sustainability of low-income homeownership: the incidence of unexpected costs and needed repairs among low-income home buyers," Housing Policy Debate, Taylor & Francis Journals, vol. 21(2), pages 317-341, March.
    • Handle: RePEc:taf:houspd:v:21:y:2011:i:2:p:317-341
    DOI: 10.1080/10511482.2011.576525
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    References listed on IDEAS

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    1. Glenn B. Canner & Karen E. Dynan & Wayne Passmore, 2002. "Mortgage refinancing in 2001 and early 2002," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), vol. 88(Dec), pages 469-481, December.
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    Cited by:

    1. Stephanie Moulton & Cäzilia Loibl & Anya Samak & J. Michael Collins, 2013. "Borrowing Capacity and Financial Decisions of Low-to-Moderate Income First-Time Homebuyers," Journal of Consumer Affairs, Wiley Blackwell, vol. 47(3), pages 375-403, November.
    2. Sonika Bhatnagar & John Lovelace & Ray Prushnok & Justin Kanter & Joan Eichner & Dan LaVallee & James Schuster, 2023. "A Novel Framework to Address the Complexities of Housing Insecurity and Its Associated Health Outcomes and Inequities: “Give, Partner, Invest”," IJERPH, MDPI, vol. 20(14), pages 1-11, July.
    3. Jessica Shui & Shriya Murthy, 2017. "Under What Circumstances do First-time Homebuyers Overpay? – An Empirical Analysis Using Mortgage and Appraisal Data," FHFA Staff Working Papers 17-03, Federal Housing Finance Agency.
    4. Riley, Sarah F. & Ru, Hong Yu & Feng, Qing, 2013. "The User Cost of Low-Income Homeownership," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 43(2).
    5. Roshanak Mehdipanah & Margaret Dewar & Alexa Eisenberg, 2021. "Threats to and Opportunities for Low-Income Homeownership, Housing Stability, and Health: Protocol for the Detroit 2017 Make-It-Home Evaluation Study," IJERPH, MDPI, vol. 18(21), pages 1-15, October.
    6. Berger, Lawrence M. & Collins, J. Michael & Smeeding, Timothy M., 2015. "Exiting or retaining owner-occupied housing in the United States 1999–2009: How do social programs matter?," Children and Youth Services Review, Elsevier, vol. 57(C), pages 112-126.
    7. Kyoung Tae Kim & Jonghee Lee & Sherman D. Hanna, 2020. "The Effects of Financial Literacy Overconfidence on the Mortgage Delinquency of US Households," Journal of Consumer Affairs, Wiley Blackwell, vol. 54(2), pages 517-540, June.

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