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Working Families With Children Locked Out of Homeownership
 Despite White House efforts over the last three administrations to boost homeownership opportunities among low- and moderate-income households, especially minorities, working families with children remain underrepresented among the ranks of the nation’s home owners, according to a new study by the Center for Housing Policy, the research affiliate of the National Housing Conference.
Based on the biannual American Housing Survey, the study — “Locked Out: Keys to Homeownership Elude Many Working Families With Children” — found that the homeownership rate of working families with children was 59.6% in 2003, three percentage points lower than it was in 1978 and 8.7 points below a homeownership rate of 68.3% for all U.S. households — despite small but steady gains since 1991.
Between 1978 and 2003, the disparity between homeownership rates for white and minority working families with children widened to 26 percentage points. The number and share of children in working families increased over that period from 41% of the nation’s 60 million children to 54% of nearly 74 million, according to the study, which was sponsored by the Chicago Dwellings Association.
For purposes of the study, working families with children under 18 were defined as those earning at least the equivalent of the federal full-time minimum wage ($10,712 a year) up to 120% of area median income. They were nearly 20 million strong in 2003, constituting 19% of all U.S. households.
“Numerous studies have shown that children of home owners are more likely to do well in school, less likely to have behavioral problems and less likely to become pregnant as teenagers,” said Ann Schnare, chairman of the board of directors, Center for Housing Policy. “Indeed, at least one study has found that the benefits of homeownership on children’s educational attainment may be strongest for lower-income families. Yet is is precisely these families who appear to be lagging behind.”
Noting that it is time to reexamine existing housing policies, Schnare said that “it is white working households and white and minority upper-income households without children who are experiencing the greatest homeownership gains. Meanwhile, homeownership rates have increased the least — and affordability problems have risen the most — among low-income minority families with children.”
Among the trends behind the homeownership gap for working families with children documented in the report:
- Single parents and minority households comprise growing shares of this group. From 1978-2003, the share of working families with children that were single-parent households doubled from 18% to 36%. The homeownership rate for single parent families was just 44.2% in 2003, compared to 68.2% for couples with children. And minority households, with relatively low homeownership rates, comprised 42% of working families with children in 2003, up from 26% in 1978.
- Minority homeownership rates lag behind those of whites. There was a 44.6% homeownership rate for minority working families with children in 2003, compared to 70.5% for their white counterparts. The disparity between the homeownership rates of minority and non-minority working families with children is greatest in the central cities, where approximately 60% of white working families with children own their homes compared to 26% of their minority counterparts. In the suburbs, some 74% of white working families with children are home owners compared to 53% of their minority counterparts. In non-metro areas, the comparable homeownership rates are 71% and 51%, respectively.
- Between 1978 and 2003, working families with children saw a 233% increase in the total costs of owning a home, compared to a 201% increase in income. Total housing costs for owners increased 264% over that period for minorities, compared to 229% for whites, with income growth of 204% and 200% for the two groups, respectively. Total increases in rental housing costs were roughly the same as for owners among both minorities and whites, but income growth for minority renters increased by only 168%, compared to 224% for their white counterparts. Among home owners, the percentage of working families with children paying more than half of their income for housing soared 200% among whites between 1978 and 2003, rising by nine percentage points. Minorities saw a 192% increase, from 3.9 to 11.4 percentage points. Among renters, whites paying more than half jumped 347% from 1.9% to 8.5 percentage points and minorities surged 923% from 1.3 to 13.3 points.
- Households without children have scored the biggest gains in homeowership. While the homeownership rate for working families with children slipped 2.9 percentage points since 1978, the rate among upper-income households (earning more than 120% of median income) without children rose nearly 10 percentage points and those with children nearly four points.
The report notes that “working families with children, in most instances, earn too much to qualify for direct housing assistance, but far too little to benefit from the favorable tax treatment available to higher income home owners.”
To keep these families from falling between the cracks of the nation’s housing support system, the report recommends targeting homeownership programs to assist low-income renter working families with children, including credit counseling; home owner education; downpayment assistance and second mortgages; and maintaining affordability through community land trusts and limited equity cooperatives, reduced regulatory barriers to development, and developing new sources of capital to reduce costs, such as housing trust funds and employer-assisted housing.
As a solution to the problem, the report also advocates a number of approaches to increase the supply of affordable for-sale and rental housing.
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