TheMReport

48 | TH E M R EP O RT O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST DATA The Bare Necessities New research links homeownership with lower rates of financial hardship. H omeownership has long been referred to as the American Dream and is frequently touted as a wealth-building tool. Now, re- search links homeownership with lower rates of financial hardship. While it is unclear whether homeownership is a cause or effect of lower susceptibility to financial hardship, researchers at the Urban Institute determined an unequivocal link between home- ownership and difficulty paying for basic needs. "Nearly half of renters report at least one material hardship in the past year, compared with just over one-third of homeowners, and renters consistently report higher rates of material hardship across all domains in our study," stated Corianne Payton and Dulce Gonzalez in "Homeowner and Renter Experiences of Material Hardship: Implications for the Safety Net." When breaking down various types of financial hardship, the researchers found the greatest discrepancy in food insecurity, which was experienced by 29.6 percent of renters and 19.2 percent of homeowners over a one-year period reported in a 2017 survey. While the discrepancy was smaller in other areas, it persisted across all categories covered in the survey. Among renters, 12.7 percent reported a partial or late rent payment over the past year, compared to 8.7 percent of homeowners reporting a partial or late mortgage payment. For utility bills, 16.6 percent of renters reported a partial bill payment in the past year, compared to 11.0 percent of homeowners. Nineteen percent of renters left a medical need unmet due to costs, and 19.8 percent ex- perienced difficulty paying for medical bills. Homeowners fared a little better with 17.0 percent reporting leaving a medical need unmet due to costs and 16.9 percent reporting difficulty paying medical bills. Renters typically have less emergency savings, and they incur unexpected income declines more frequently than homeowners, ac- cording to the Urban Institute. Almost 28 percent of renters are unsure they could afford an unexpected expense of $400, com- pared to 18.4 percent of home- owners, even when controlling for demographic, socioeconomic, and geographic traits, according to the research. For renters earning less than 200 percent of the federal poverty level, the share jumps to 50 per- cent who would struggle with a $400 expense. This compares to 38 percent of homeowners in the same income bracket. Eighteen percent of renters re- ported a significant or unexpected fall in their income over the past year, compared to 14 percent of homeowners. The report clarifies that homeownership does not signify a lack of financial hardship, and financial hardship varies, as one might expect, among homeowners of different income brackets. "This suggests that home- ownership may not be enough to achieve financial security for people with the lowest incomes," the researchers stated. However, the discrepancy between homeowners and renters is notable and persistent. Even when comparing only renters and homeowners for whom a $400 unexpected expense would be difficult, homeowners were more financially secure. Among this group of households with "low savings cushions," 82.6 percent of renters reported at least one financial hardship over a one-year period compared to 75.5 percent of homeowners, according to the Urban Institute. The cause for this discrepancy is unclear for now. "Because the elements that shape financial security are numerous and interrelated, we cannot determine whether hous- ing tenure choice is a product of financial security, or whether financial security drives housing tenure choice," the Urban Institute stated.

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