Does Homeownership Protect Individuals From Economic Hardship During Housing Busts?

Does Homeownership Protect Individuals From Economic Hardship During Housing Busts?

Housing Policy Debate

Sisi Zhang, Robert I. Lerman

Abstract

Does homeownership protect individuals from experiencing economic hardships even during housing busts? Does the relationship differ by race and ethnicity? Using the Survey of Income and Program Participation 2008 panel in the United States and controlling for income and various family characteristics, we find that the likelihood of experiencing any hardship is 5.6 percentage points lower for homeowners than for renters without rent subsidies, a reduction of about 25%. Owning a home for more than 10 years provides more protection than owning a home for less than 4 years. Homeownership’s role in shielding people from economic hardship is significant not only for non-Hispanic whites, but also for non-Hispanic blacks and Hispanics. The negative relationship of homeownership to economic hardship offers additional evidence that it is beneficial to own your home, even during housing busts and even for households of color.

Keywords: Homeownership; Economic hardship; Race and ethnicity; Housing bust