Fostering low-income homeownership: A longitudinal randomized experiment on Individual Development Accounts

Abstract

For low-income families, homeownership represents an important strategy to move out of poverty and offers long-term social and economic development opportunities. Individual Development Account (IDA) programs facilitate savings towards assets such as home purchase through matched savings, financial education and case management. Using longitudinal experiment data from the American Dream Demonstration, this study examines the influence of IDA participation on homeownership rates among low-income participants after 18 months (Wave 2) of program participation and after 48 months (Wave 3) at program completion. Involvement in specific home-search activities at Waves 2 and 3 was measured to determine whether these activities mediated the affect of IDA programs on homeownership. Results from this randomized experiment indicated that IDA participation significantly increased homeownership rates at 48 months. Furthermore, participation in the home search activity, clearing debt, at 18 months of program participation mediated the effect of the IDA program on homeownership at 48 months.

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