The aftermath of the general financial crisis for the ownership society: what happened to low-income homeowners in the US?

The last half of the twentieth century was a period of unprecedented growth in homeownership in the United States and Europe. In the UK and the USA, policy and government actions were focused on increasing homeownership as part of a new ‘ownership society’. This was especially true in the 1990s and 2000s. Now, in the aftermath of the Global Financial Crisis and the housing market collapse, there is renewed concern with the loss of housing-wealth, affordability and even whether ownership will ever be attainable for low-income and minority populations. This paper examines the rise in home ownership as governments engaged in a policy experiment of greatly expanding ownership. The paper extends the aggregate studies of the housing crisis by examining population cohort behavior during the housing bubble and the individual outcomes as a result of the housing experiment. I use data from the Panel Study of Income Dynamics to evaluate the impacts of the debt burden and negative equity on ownership and conclude that they will have long-term impacts on the ability of low-income and minority households to enter the housing market or even to keep their homes. The policy goal of a broadened ownership society will be difficult to sustain in the light of stagnant incomes and high prices even after the recent decline in house values.