Exiting or retaining owner-occupied housing in the United States 1999-2009: How do social programs matter?

This research examines exits from homeownership in the United States between 1999 and 2009 using data from the Panel Study of Income Dynamics. We first document the extent to which homeowners exited owned housing (to a rental unit or a rent-free unit) during that time period. Second, we examine how socio-demographic characteristics, housing characteristics, debt levels, and receipt of public and private transfers are associated with exiting (or retaining) homeownership, with a particular focus on whether transfers counteract earnings decreases and/or housing cost increases to assist homeowners in retaining their homes. We also investigate whether these associations differ for several subgroups of homeowners defined by their location in the income distribution and race. Findings from regression models that include individual, year, and state fixed effects highlight the role of both labor markets and housing markets in influencing exits from homeownership. More generous and universal public transfers (such as OASDI) appear to help owners retain homes, whereas less generous and means-tested transfers do not. At the same time, the influences of universal transfers on retaining a home are small in magnitude compared to those of decreases in earnings and home values as well as increases in payment-to-income and consumer debt-to-income ratios.