Housing Boom Pushed Ownership Out of Reach For Many
--------------------------------------------------------------------------------


WASHINGTON, D.C. – Low- to moderate-income working families with children are less likely to be homeowners now than they were in the late 1970s, according to a new study of U.S. homeownership trends over a quarter century from the Center for Housing Policy, the research affiliate of the National Housing Conference. The study, entitled Locked Out: Keys to Homeownership Elude Many Working Families With Children, also found that, despite expanded efforts to boost homeownership by the last three administrations, the homeownership gap between white and minority working families with children not only did not improve, but worsened between 1978 and 2003 – specifically, the disparity widened to 26 percentage points. The study was sponsored by the Chicago Dwellings Association.

These comprehensive findings are particularly troubling because of the evidence that homeownership may play a positive role in helping children do better in school. Yet working families with children, and especially minority working families with children, are lagging far behind.

“This study takes a rare look at U.S. homeownership trends over a quarter century for an important segment of the population and finds that, contrary to what many might have expected, working families with children are less likely to be homeowners now than they were in the late 1970s,” said Jeffrey Lubell, executive director of the Center. “These findings suggest that there is much more that needs to be done to bring the American Dream within reach of working families with children, especially minority working families with children.”

The study defines low- to moderate-income working families with children as those families that earn at least the equivalent of the full-time minimum wage of $10,712 annually up to 120 percent of local area median income.

Homeownership Trends

According to the latest Census statistics, nearly 70 percent of Americans now own their homes – the highest homeownership rate on record. However, most of the gains have been among families without children and upper-income families with children. The study defines upper-income families as those families that earn above 120 percent of local area median.

Low- to Moderate Income Working Families

In 2003, the homeownership rate for upper-income families with children was 90.8 percent, while the rate for their low- to moderate-income counterparts was significantly lower at 59.6 percent – yet in 1978 some 62.5 percent of low-to moderate-income working families with children owned their homes.

Ultimately, had the 1978 homeownership rates for working families with children prevailed in 2003, an additional 2.3 million children would now be living in owner-occupied homes.

Minorities vs. Whites

In 2003, some 44.6 percent of minority working families with children were homeowners – virtually unchanged from the 44.8 percentage rate in 1978. Meanwhile, the homeownership rate among their white counterparts increased over the same period from 68.7 to 70.5 percent.

The homeownership rate for minority categories in 2003 was 42.3 percent for Hispanics, 44.6 percent for blacks and 53.6 percent for a category comprised of Asians and other minority groups. The largest gains from 1978 to 2003 were among Asians/others whose homeownership rate grew more than 10 percentage points.

Regional Findings

The homeownership rate among working families with children was lowest in the West at nearly 52 percent in 2003, down from 54 percent in 1978. Rates have declined the most in the Midwest from almost 72 percent in 1978 to nearly 68 percent in 2003.

In 2003, disparities among minority working families with children and their white counterparts grew most in the Northeast with a homeownership rate for minority working families with children of 33 percent compared to a 73 percent rate for their white counterparts – a gap of some 40 percentage points.

Cities, Suburbs and Non-Metro Areas

The disparity between the homeownership rates of minority and non-minority working families with children is greatest in the central cities where approximately 60 percent of white working families with children own their homes compared to 36 percent of their minority counterparts, a difference of 24 percentage points.

By comparison, in the suburbs some 74 percent of white working families with children are homeowners compared to 53 percent of their minority counterparts. In non-metro areas, the comparable homeownership rates are 71 percent and 51 percent, respectively.

The Homeowners Income Gap

One of the demographic trends underlying homeownership rates among working families with children is the change in household composition that has occurred since 1978. In 2003, single-parent households comprised some 36 percent of working families with children, double the 18 percent rate in 1978.

In addition, the Center’s research shows that in many housing markets the incomes of working families with children failed to keep pace with the rising costs of housing. Between 1978 and 2003, the homeownership costs of working families with children – including mortgage payments, utilities, taxes and insurance – increased by 233 percent, some 32 percentage points more than the 201 percent growth in incomes of these families over the same period.

This gap was even more pronounced for minority working families with children. Among minority working families with children, total homeownership costs increased 264 percent between 1978 and 2003, some 60 percentage points above the 204 percent growth in incomes over this period. For white working families, total homeownership costs increased by 229 percent between 1978 and 2003, about 29 percentage points more than the 200 percent growth in incomes.