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Publication Date

May 2007


Michael A. Stegman, Roberto G. Quercia, Walter R. Davis


Ford Foundation


Homeownership is considered an effective wealth creation mechanism for low-income households.

This study examines the appreciation of homes purchased with community reinvestment loans in a national pilot in the United States called the Community Advantage Program (CAP).

Homes purchased between 1998 and 2002 are found to have appreciated at a median annual rate of 5.4% between the time of purchase and spring 2003. This is less than the national house price appreciation index of 7.0% (covering 1998–2003) but higher than other types of investments, such as the Dow Jones Index (2.78% annual growth rate) and the average rate on a 6-month CD (4.34%) over the same time period. The median increase in net housing wealth of the Community Advantage homeowners is $17 492.

Returns have been particularly impressive for the lowest-income borrowers. Borrowers with less than $20 000 in annual household income at the time of purchase had a median down-payment of $1,790 and have experienced a median equity increase of $24, 724. Price and equity appreciation rates for African Americans are solid, but are about 10% lower than for whites.

Topics(s): Affordable Homeownership, Impacts of Homeownership, Mortgage Finance, Savings & Asset-Building