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Publication Date

August 2013


Mark R. Lindblad, William M. Rohe


Ford Foundation, Bank of America, NeighborWorks America


The recent housing crisis and ensuing economic recession have been unprecedented in modern times. The loss of wealth due to the decline in value of real estate has been dramatic. Between 2006 and 2011 house prices fell more than 30 percent nationally, wiping out over $8 trillion in home equity. At the height of the crisis, a full one-quarter of all homeowners owed more on their mortgages than their homes were worth. Moreover, many people have been put out of their homes and had their credit ratings severely damaged. Mortgage foreclosures increased from the 1980-2006 average foreclosure rate of .32 percent to over 4.9 percent in 2010. Between 2008 and 2011, more than four million homeowners lost their homes to foreclosure, and there are many more homeowners who were forced to sell, often at a prices that were less then they owed on their mortgages. Recent data also indicate that there are an additional two million homeowners who are at least 90 days delinquent on their mortgage payments, suggesting that the high foreclosure rate will continue for some time to come.

Given these recent events, it is reasonable to ask, first, if the bloom is off the rose of homeownership. One of the attractions of homeownership is that it has been seen as a good financial investment.

A second and related question is do the social benefits of homeownership found in past research, such as greater political participation and positive educational outcomes for children, still apply? That research was conducted at a time when a very small proportion of homeowners were experiencing heightened economic and psychological stress due to difficulty in making mortgage payments, mortgage delinquency and foreclosure, and dramatic drops in home equity. Might the recent, dramatic increases in these problems impact the attitudes, behavior, and health of homeowners?

The purposes of this paper are, first, to present a conceptual model of how the housing crisis and ensuing recession might impact both interest in and the social impacts of homeownership. A second purpose is to review the limited empirical evidence on how, if at all, the recession and housing crisis have altered interest in homeownership or altered its actual impacts. A third purpose is to provide an updated review of the literature of the social impacts of homeownership, most of which was conducted before the recession. Fourth, we will draw some preliminary conclusions on how the recession and housing crisis may have altered the social impacts and what additional research is needed on this important topic. In this paper we focus on five social impacts: psychological health, physical health, parenting and children’s academic achievement and behavior, social and political participation, and neighborhood/social capital.



Topics(s): Affordable Homeownership, Community Advantage Program, Default, Bankruptcy, & Foreclosure, Housing Policy, Impacts of Homeownership, Mortgage Finance, Other