This study examined the relationship between homeownership and social capital among low-and moderate-income (LMI) households. Using data from the Community Advantage Panel Study, the authors used propensity score weighting and regression analyses to explore the relationship between LMI homeownership, neighborhood conditions, and social capital. After controlling for several important individual-and neighborhood-level characteristics, the authors found that homeownership is related to greater access to social resources in general but not to social resources within the neighborhood. Instead, resource generation within the neighborhood is largely predicted by neighborhood stability and perceived neighborhood size. Policy implications are discussed.
KEY WORDS: Community Advantage Home Loan Secondary Market Program; homeownership; low-income; resource generation; social capital
Homeownership has long played an integral role in wealth and asset accumulation, community growth, and the promotion of positive social outcomes for individuals and families in the United States (Retsinas & Belsky, 2002; Rohe & Stewart, 1996; Shlay, 2006). Since the 1930s, government policies such as tax incentives, subsidy payments, and market regulation have promoted homeownership as a vehicle to stimulate economic growth (Carliner, 1988). Since the 1980s, they have also been used to spur community redevelopment and provide improved housing options for low-income families (Shlay, 2006).
In light of economic and racial disparities in homeownership rates (Collins, 2002; Herbert, Haurin, Rosenthal, & Duda, 2005; Williams, Nesiba, & McConnell, 2005), recent economic and social policies have focused on promotion of homeownership as a way to provide long-term economic stability and other benefits to low- and moderate-income (LMI) families who may not have benefited from earlier policies. As a result, the rate of entry into homeownership for low-income and minority households has been increasing faster than that for other groups (Belsky & Duda, 2002).
Research has supported the belief that the benefits of homeownership, such as life satisfaction and neighborhood stability, transcend wealth accumulation for both homeowners and communities (Rohe, Van Zandt, & McCarthy, 2002), although this body of research has primarily focused on middle-and high-income populations. It is important to examine whether LMI individuals and families also experience the positive benefits of homeownership found for middle-and higher-income households. Furthermore, the recent housing crisis, which has been blamed in part on the expansion of risky mortgages to LMI borrowers, underscores the need for a careful look at the costs and benefits of LMI homeownership. This study focused on one perceived benefit of homeownership: its potential impact on access to social capital. Specifically, using data from the 2007 Community Advantage Program (CAP) panel survey and the 2000 U.S. Census, this study examined the differences in the level of access to social resources between LMI homeowners and LMI renters and what role neighborhood economic and social conditions play in the relationship between resource generation (RG) and homeownership.
Research has sought to identify externalities of homeownership and the potential social benefits that help determine the overall impacts of promotion of homeownership. Rohe et al., (2002) conducted a critical assessment of the research on the costs and benefits of homeownership and concluded there is evidence of positive benefits of homeownership, but they also cautioned that the potential negative impacts should be investigated further. Numerous studies lend support to the belief that homeownership is related to increased involvement in local organizations, neighborhood stability, local problem solving, and satisfaction (DiPasquale & Glaeser, 1999; Rohe & Stegman, 1994b; Rohe & Stewart, 1996).
Several studies on the relationship between homeownership and social capital have focused on the levels of participation in organizations as an indicator of investment in the neighborhood (DiPasquale & Glaeser, 1999; Rohe & Stegman, 1994b). In a longitudinal study on social capital, Rohe and Stegman (1994b) examined a sample of 143 low-income homebuyers participating in an affordable homeownership program in Baltimore, Maryland, sponsored by the Enterprise Foundation. A comparison group included 140 randomly selected, non-elderly, Section 8, low-income renters. They interviewed participants on a series of measures of community involvement while controlling for characteristics such as income, age, and education. They found that homeowners were more likely to participate in neighborhood and block associations but not in other community organizations, such as political or social organizations, compared with a matched set of renters. However, they also found that homeowners had lower levels of involvement with neighbors, suggesting that homeowners may be more likely to participate in formal social interactions at the neighborhood level but less likely to participate in informal social interactions.
Rohe and Stegman (1994b) offered two explanations for these findings. First, the significant number of new homeownership units clustered together may have limited the existing informal networks that typically help integrate new residents into neighborhoods. Second, homebuyers are thought to have a higher economic interest in the conditions of the local area and thus may be more likely to participate in formal interactions such as block associations.
Other studies on the effects of homeownership on both informal and formal local social interaction over time have supported the finding that homeownership is related to increased formal social interactions but not informal ones (Rohe & Basolo, 1997; Rossi & Weber, 1996). Rossi and Weber used three public use data sets--the General Social Survey, the National Survey of Families and Households, and the American National Election Studies--to identify social correlates of homeownership. They found that renters are shown to be more sociable than owners in terms of spending time with neighbors, coworkers, or friends. Thus, homeowners are less neighborly than renters. However, the authors cautioned that the homeowners and renters in this sample differed in important ways, but only age and socioeconomic status were controlled for, so other variables could help explain the differences. For example, the authors suggested that homeowners may have more children in the household and thus may be more likely to interact socially with family rather than neighbors. Rossi and Weber concluded from their research that the overall social effects of homeownership are minimal and inconsistent.
SOCIAL CAPITAL THEORY
The concept of social capital has been defined in myriad ways and can be conceptualized as either an individual resource (connections to others that yield material or social benefits; Bourdieu, 1985) or a collective resource (shared stocks of trust that contribute to collective problem solving; Putnam, 1995). For the purposes of this study, we focused exclusively on individual social capital as defined by Van der Gaag and Snijders (2004): Social capital is "the collection of resources owned by the members of an individual's personal social network, which may become available to the individual as a result of the history of these relationships" (p. 200).
The present study draws on network theory (Lin, 1999), which characterizes social capital as assets in networks by highlighting investment in social relations with expected returns. Network theory, as defined by Lin, differentiates the access and the use of social capital. Access-based social capital is a collection of potentially usable social resources. Use-based social capital, on the other hand, refers to actions and consumption of resources to generate returns (Lin, 2001). We operationalize access-based social capital in this study as RG, which focused on the degree to which respondents had access to various social and economic resources through social networks. This study used a modified version of the Resource Generation instrument developed by Snijders (1999), a version based on Lin's network theory, as a way to conceive of social capital as an individual pool of resources embedded in personal networks.
The theoretical relationship between social capital and homeownership has been explained in terms of financial motivation. The economic rational choice theory posits that homeowners have a higher financial stake in their neighborhoods and communities because house values are affected by neighborhood and community vitality. Thus, homeowners are more likely than renters to get involved in politics, community organizations, or other efforts to improve their neighborhoods in order to protect their investment (DiPasquale & Glaeser, 1999; Herbert & Belsky, 2006). For example, local land-use decisions affect property values, thus homeowners have a higher economic stake in these political decisions. Likewise, neighborhood safety is likely to affect home values, thus encouraging homeowner involvement in neighborhood watch groups. However, research that examined economic reasons for home buying and social capital found no evidence to support the economic rational choice theory, meaning that economically motivated homebuyers were no more likely than buyers with other motivations to have higher social capital (DiPasquale & Glaeser, 1999; Rohe & Stegman, 1994a).
A second explanation, related to financial motivations that developed as part of the rational choice theory, is the cost of moving, which is typically higher for homeowners than renters. Due to the high transaction costs associated with moving, homeowners may be more likely to improve and maintain neighborhoods than to move away (DiPasquale & Glaeser, 1999; Herbert & Belsky, 2006). This...