Support Needed After Home Purchase, Too
Economist's research suggests low-income, vulnerable homeowners need support after purchase to avoid foreclosure or having to sell their home
Programs that help low-income and minority individuals and families purchase a home may be doing more harm than good, according to a Kansas State University economist.
When vulnerable homeowners don't get support after they purchase a home -- maybe one they really couldn't afford in the first place -- they're more likely to return to renting, said Tracy Turner, K-State assistant professor of economics. She and Marc Smith, professor of finance and director for the Institute of Housing Studies at DePaul University, are publishing their research in a forthcoming issue of the Journal of Regional Science.
"Moving vulnerable renters into homeownership without post-purchase support wastes tax dollars as well as creates great hardships for these new homeowners who lose their homes," Turner said.
Turner and Smith studied how populations with low homeownership rates also leave homeownership at high rates, either through foreclosure or selling the home. From 1970 to 2005, they found that low-income homeowners were consistently more likely to exit homeownership than higher income households. Hispanic households had higher exit rates before 1997 but not after.
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