IDAs for housing policy: Analysis of saving outcomes and racial differences

Homeownership is a desirable goal for most Americans and is considered an integral part of the American Dream. Empirical studies indicate that homeownership has many positive outcomes. In addition, homeownership is regarded as a major means of assets accumulation. While government aims at promoting homeownership and narrowing wealth and racial inequalities, many public policies have been criticized as failing to accomplish this task. Low-income households do not participate in many of the current asset-based policies, and homeownership is still a key indicator of the racial inequality in the United States. The challenge policy makers face today is to promote inclusive policies that promote asset accumulation among all income and racial groups. One policy to encourage savings and asset accumulation in general, and homeownership in particular, is Individual Development Accounts (IDA). IDAs are matched savings accounts for the working poor, designed to help them build assets.;This dissertation examines the unique experiences and outcomes of IDA participants who are saving for a home. It also explores the differences between Whites and Blacks who are saving for a home. The data come from the American Dream Policy Demonstration (ADD), which is the first large-scale test of IDAs that followed participants (N = 2,364) from 1997--2001.;The results indicate that low-income participants in IDAs who are saving for a home have the ability and willingness to save when they are provided structured opportunities to accumulate assets. In addition, this dissertation examines both individual and institutional factors that may be associated with saving performance among this group. Findings suggest that institutional factors, not merely individual characteristics, are important in saving performance. The second part of this dissertation looks at the saving performances of African Americans compared to Caucasians who are saving for a home. The finding suggests that while both low-income African Americans and Caucasians can save in IDAs, Blacks are saving smaller amounts. Results of separate regressions for Blacks and Whites indicate that more institutional characteristics are associated with savings among African Americans. Implications for policy makers, program administrators, and future research are given.