Constructing Homeownership Policy: Social Constructions and the Design of the Low-Income Homeownership Policy Objective

Abstract

This paper offers a new perspective to explain how and why the U.S. federal government pursued a policy agenda that from the early-1990s promoted homeownership as the preferred housing tenure of choice for low-income households. Using policy design theory (Schneider & Ingram 1997), this paper argues that the social constructions of homeownership, low-income households, and the private mortgage industry were instrumental in the development of policies to increase low-income homeownership. The benefits associated with homeownership, based on long-standing norms around success, stability, and the American Dream, justified government interventions to increase access to private mortgage markets for low-income households. This policy stance, however, did nothing to assist households with maintaining homeownership for the long term. The social constructions embedded in the rationales and implementation of these policies contributed to their failure to sustain homeownership and realize its benefits for low-income homeowners.

Keywords:

• Homeownership
• social construction
• policy design theory
• low-income households
• U.S. housing policy

Notes

¹ Additional measures were taken to increase enforcement of anti-discrimination policies and expand homeownership specifically among minorities, including low-income minorities (Schwartz, 2010).

² See Holt (2009) for a brief but comprehensive list of contributing factors, and Herbert & Apgar (2010) for a much longer and detailed examination of the root causes of the foreclosure crisis.

³ Despite this early role in encouraging low-income lending, actual loans made under CRA accounted for only small share of total loans in low-income communities. CRA loans have also performed better than non-CRA loans, with default and foreclosure rates consistently below those of loans made to higher income households, despite the higher risk profile of CRA borrowers (Krozner, 2009).

⁴ For comprehensive summaries of the academic literature on the effects of homeownership on households, see Dietz & Haurin (2003) and Rohe et al. (2002).

⁵ In the policy rhetoric around expanding homeownership for low-income and underserved populations, homeownership was often linked to reduced crime, better schools and educational outcomes, more stable and prosperous communities, and a stronger national economy (e.g. HUD, 1995).