Individual Development Accounts for Housing Policy: Analysis of Individual and Program Characteristics

Abstract

Homeownership is a desirable goal for most Americans and is considered an integral part of the American Dream. Empirical studies indicate homeownership has many positive outcomes. However, homeownership is not prevalent among low-income populations. Individual Development Accounts (IDAs) are matched savings accounts designed to help the working poor save for a home or other assets. This paper examines the savings outcomes of IDA participants saving for a home in the American Dream Policy Demonstration, which was the first large-scale test of IDAs. Data were collected from 1997 to 2001 on 1176 participants saving to purchase a home. Results indicate that low-income IDA participants can successfully save when provided structured opportunities. This paper examines individual and program characteristics that are important to explaining saving behaviors. Implications for policy makers, program administrators, and future research are given.

Keywords:

• Assets
• homeownership
• housing affordability
• housing policy
• IDAs
• poverty

Notes

¹ For more information on the experiment, please see Mills et al. (2008).

² While the R² statistics are not very high, they are within the range of R² statistics reported in this field. This study controlled for many important covariates such as education, race, income, public assistance, gender and age in the analysis. While there are undoubtedly important predicators that may be left out or that the authors do not have a way to measure (i.e. discrimination) many of the important predictors are included in the analysis. Nonetheless, it is not possible to discount the influence of other, unknown, factors.