Homeownership Symposium - Developing Effective Subsidy Mechanisms for Low-Income Homeownership

J. Michael Collins

HBTL-08: Public policies at the federal, state, and local levels have espoused to support homeowners and homeownership for decades. Yet, low-income people continue to face barriers to buying homes, primarily because of a lack of income and net worth. Public polices attempt to subsidize these barriers to homebuying for low-income people through tax policies, grants and other strategies. Current policies are, at best, inefficient and inequitable, and, at worst, ineffective. A more systematic approach would adhere to a set of operating principles including achieving scale, focusing on moving renters to ownership, targeting subsidies to underserved populations, creating incentives for repayment, and maximizing efficiency. Designing homeownership subsidy policies invokes tradeoffs between effectively targeting underserved populations and efficiently using scarce public resources. Alternative approaches may point the way to potential innovations in promoting low-income homeownership.