Transitioning to Homeownership: Asset Building for Low- and Moderate-Income Households

This article assesses the asset building of households that take part in shared-equity homeownership (SEH) models. The contribution of this article is a comparison of outcomes for households participating in shared-equity programs with other low- and moderate-income households who rent or own properties without restrictions on appreciation. We matched participants in SEH programs to households with similar characteristics from the Panel Study of Income Dynamics (PSID) over the 1997-2017 period. The findings indicate that in real terms, median SEH homeowners accumulated about $1,700 in housing wealth annually or around $10,000 during their holding period. This amount is lower than the $2,100 median annual gain in home equity experienced by similar PSID owners but statistically and economically significantly larger than the $16 in annual gain experienced by similar PSID renters. The findings provide evidence that households participating in SEH programs experienced positive, but modest, wealth gains that were slightly lower than those of homeowners in unrestricted units but substantially higher than those of renters.