Institutional Myopia and Policy Distortions: The Promotion of Homeownership for the Poor

By Meyer, Peter B.; Yeager, Jerry et al. | Journal of Economic Issues, June 1994 | Go to article overview

Institutional Myopia and Policy Distortions: The Promotion of Homeownership for the Poor


Meyer, Peter B., Yeager, Jerry, Burayidi, Michael A., Journal of Economic Issues


Housing is acknowledged to be a national problem in the United States. The precise nature of that problem, however, is largely unspecified--and certainly not an element of policy consensus. Most policies are directed at relatively short-term fixes, ranging from providing more shelter space to offering homeownership status to low- and moderate-income households. The myopic perspective of policymakers was well visible in the 1960s provision of loan subsidies to developers in return for inclusion of low- and moderate-income rental housing in their projects. That housing supply evaporated as the loans were paid off and the requirements lifted; this pattern is one source of the current crisis. The emphasis on homeownership evident in the federal policies that emerged in the 1980s similarly takes a short-term view [Stegman 1991].

An infusion of cash may be able to solve immediate acquisition problems and permit lower income households to attain ownership. The rhetorical rationale for the promotion of ownership is that it will improve the stability of housing tenure and increase residents' commitments to their dwelling places and communities [Silver 1990]. However, minimal institutional attention has been given to preservation of tenure over time. This short-term focus is inappropriate for policies directed at long investment decisions and is inconsistent with the avowed intent to stabilize tenure. Unfortunately, such a myopic perspective that defines the problem as one of attaining, not sustaining, ownership is consistent with, and inherent to, conformance to short-term private market pressures [National Association of Homebuilders 1986].

A core belief in "privatization" and the superior allocative and productive capacities of the private marketplace characterized the Reagan--Bush years. These perspectives led to the redirection of federal housing policies away from assuring a supply of low-cost housing to focus on efforts to promote homeownership for lower income households. Observers of these policies have commented on declines in the affordable housing supply and the growth in homelessness that accompanied them [van Vliet and van Weesep 1990].

This paper argues that the institutional assumptions that attainment of ownership status is tantamount to increased stability of tenure and maintenance of that status are false. The pervasive myopia is such that even federal non-housing policies (such as the eligibility criteria associated with federal income maintenance and medical assistance programs as currently administered) may act to inhibit low- and moderate-income homeownership. We begin our argument with a review of the patterns of income instability of low- and moderate-income households. Next, we examine the ability of low- and moderate-income households to predict their own housing mobility. Finally, we return to the institutional factors shaping a myopic view of the housing problem that ignores these issues and conclude with some suggestions for policy responses.

The Income Instability Facing Low- and Moderate-Income Households

Low- to moderate-income would-be homeowners confront several barriers to acquiring and maintaining their own homes. These include: (1) the down payment and closing costs, which require some asset base or assistance from other sources; (2) the monthly carrying costs (including mortgage, utility, insurance, and tax payments), which they have to cover out of their current income; and (3) unanticipated maintenance and repair costs, which they may not be prepared to address. Reflecting the pervasive institutional myopia, public and private efforts to assist low- and moderate-income households to enter into homeownership tend to focus on the first two cost elements and ignore the third.

This inadequate support system can place an inordinate burden on a homeowner over time. For example, if a water heater breaks down, the plumbing starts leaking, or a tree branch crashes through a roof, homeowners would be faced with emergency repairs. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Institutional Myopia and Policy Distortions: The Promotion of Homeownership for the Poor
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.