Homeownership for the poor in distressed neighborhoods: Does this make sense?

Several recent studies have found that homeownership has positive effects on children's development. This article extends these studies by testing whether these effects depend on neighborhood conditions. This extension is important because many low-income families that become homeowners under current policies promoting homeownership for the poor are likely to purchase homes in troubled or distressed neighborhoods. Homeownership in almost any neighborhood is found to benefit children, while neighborhood effects are weak. This suggests that the children of most low-income renters would be better served by programs that help their families become homeowners in their current neighborhoods instead of helping them move to better neighborhoods while remaining renters. However, the positive effects of homeownership on children are weakened in distressed neighborhoods, especially those that are residentially unstable and poor. Thus, helping low-income families purchase homes in good neighborhoods is likely to have the best effects on children.