George McCarthy, Shannon Van Zandt and William Rohe from the Center for Urban and Regional Studies at the University of North Carolina at Chapel Hill, authors of the study, say, "There is considerable, although not irrefutable, evidence that homeownership is associated with housing and financial security… research on the impacts of homeownership also suggests that these benefits may not accrue to all homeowners."

A spokesperson for RIHA highlights the finding that, "The federal mortgages interest deduction, widely held to benefit homeowners, often cannot be used by low-income families, the authors [of the study] point out." The study illustrates the disparity between those in low-income households and those in higher tax brackets.

Low-income households often feel financially compelled to file for the standard deduction and miss out on the mortgage interest deduction and those who have the means to hire someone to help them or have the financial need because of higher-income status to file itemized taxes and benefit from claiming mortgage interest and other homeownership tax preferences.

"The inability of most poor and working-class homeowners to access a major piece of the American dream remains a paradox of American tax policy," says Steven Hornburg, executive director of RIHA. "This is true particularly in light of the recent enactment of historic tax relief legislation."

The authors of the study say, "There has been little research that carefully measures and compares the relative benefits of ownership across socioeconomic groups. We should have a more accurate assessment of the potential benefits and risks faced by [low-income] households before we persuade them to become homeowners."

McCarthy, Van Zandt and Rohe call for policymakers to examine methods for protection from collateral loss and/or default. "Homeownership can help stabilize a neighborhood and start a self-fulfilling cycle of improvement and wealth creation," added Hornburg. "However, for this stabilizing pattern to emerge, the new homeowners must be successful -- they must make their mortgage payments on time and have enough money to properly maintain their home. Homeownership must be sustainable."

Instant Insights /

RIHA: Risks in Homeownership for Low-Income Households

Related Stories

Recommended For You