In many countries, homeownership is one the biggest financial decisions many households make. Housing is intrinsically linked to financial services because it acts as a destination for, and a form of, savings. It has also been a major policy goal for decades, especially in low-income areas. In the United States, housing policy has focused on the dual goal of increasing the overall rate of homeownership while also decreasing racial disparities in homeownership by targeting under-served neighborhoods, particularly since the 1990s. Exploiting variation in areas targeted by the 1992 Federal Housing Enterprise Financial Safety and Soundness Act (1992 GSE Act), the research team will rely on census and administrative data to investigate whether geographically-targeted policies subsidizing financial investments – in this case, support for mortgage financing – can inadvertently “cement” the disadvantaged social strata of targeted populations. Geographic disparities in homeownership, racial segregation, as well as declining upward mobility for low income households and minorities are among the main outcomes of interest. Studying the impacts of the 1992 GSE act along these dimensions is not only valuable in its own right, but can also provide valuable insights into more recent policy efforts aimed at extending new sources of housing credit to lower income households to rebuild declining urban areas.

Miniature Model of House and Keys

Credit: Tierra Mallorca