Opportunity and Ownership: Briefs

Publications : Briefs

Using data from the Making Connections Cross-site Survey, this brief explores movement into and out of homeownership for families with children in selected low-income neighborhoods. We find that poor families and those with less home equity are more likely to move out of homeownership. With the reduction in home prices in many areas, brought on by the housing crisis, there are increasing opportunities for affordable homeownership. However, we find that two-parent and Hispanic families may be relatively more likely, and blacks and single-parent families relatively less likely, to take advantage of these new chances for homeownership.

A key driver of persistent poverty is a lack of savings and assets. While public assistance can help families, assets give families the means to help themselves. Rather than thinking in isolation about each asset—education, homeownership, or retirement savings—policies to combat poverty or build wealth should account for people's needs and ability to acquire assets over a lifetime. To help craft a more inclusive wealth-building policy, this brief seeks evidence from typical lifecycle saving patterns and draws on suggestions from a roundtable of asset, education, housing, and retirement policy experts.

Family events, such as a job loss, the onset of health limitations, and a change in family structure, can adversely affect family well-being. The impact of these events may be mitigated if the family holds assets that can be used to maintain consumption. Using the SIPP, this study examines the role of assets in families' economic stability. We find that families in all parts of the income distribution experience material hardship after a negative event. Further, in the aftermath of a negative event, asset-poor families experience more hardship than non-asset-poor families, with assets helping most for low- and middle-income families.

Americans save for retirement by building wealth in personal accounts, home equity, pension plans, retirement accounts and Social Security. We use data from the Survey of Consumer Finances (SCF) and methods to estimate the wealth values of Social Security and pension plans to show how wealth builds over the life cycle. We find that the typical household accrues wealth throughout the life cycle. Households in the bottom income quintile, those that did not complete high school and minorities accumulate much less wealth than their counterparts, and Social Security accounts for a large share of their preretirement wealth.

Nearly one quarter of low-income families do not have a checking or savings account, more than one-third do not own cars, 60 percent do not own a home, and 90 percent have no retirement account. In contrast, the typical middle-income family has checking or savings accounts, retirement accounts, owns a car and a home. This brief synthesizes current research on the assets and liabilities of low-income families into a variety of portraits and provides suggestions for future research and policy.