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Low-income homeowners given high-quality mortgage products build wealth at higher levels than renters, according to a new report from the UNC Center for Community Capital.

Findings contained in the report, “Low‐ and Moderate‐Income Homeownership and Wealth Creation,” suggest that homeownership remains a reliable wealth‐building mechanism for low‐ and moderate‐income (LMI) families who obtain quality mortgage products, say report co-authors Allison Freeman and Roberto G. Quercia.

“A lack of diversification in one’s financial portfolio is believed to increase risk, and the differing effects of the financial recovery certainly seem to demonstrate that this might be so. Because of this, many have raised concerns about the desirability of extending homeownership to lower‐income families, whose wealth is concentrated in their homes,” the authors say.

“Because low‐ and moderate‐income Americans simply do not hold the types of assets held by higher-wealth families, the home has a particularly important role in their financial portfolios,” researchers say. “We find a strong correlation between homeownership and wealth.”

Researchers studied changes in wealth of low- and moderate-income (LMI) homeowners compared to LMI renters from 2005-2012, a period that includes the financial crisis. The wealth data comes from the center’s Community Advantage Program (CAP) study, an in‐depth, longitudinal examination of LMI homeowners who obtained their mortgages through a nationwide affordable mortgage program and renters.

Researchers looked in particular at changes in the net worth of CAP owners who retained their homes, owners who transitioned out of homeownership, renters who bought a home during the course of the study and renters who maintained that tenure status since the study began.

The study is funded by the Ford Foundation.

The report is available on the center’s website.

Mortgage finance is a key area of study for the UNC Center for Community Capital, the leading center for research and policy analysis on the transformative power of capital on households and communities in the United States. Part of the College of Arts and Sciences at the University of North Carolina at Chapel Hill, the center offers data and analysis that helps policymakers, advocates and the private sector find sustainable ways to expand economic opportunity to more people more effectively. For more information, visit or call (919) 843-2140.

Topics(s): Affordable Homeownership, Impacts of Homeownership, Mortgage Finance
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