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Abstract

Empirical research examining whether owning a home is less costly than renting for low-income households is largely lacking. We use detailed property information provided by a set of low-income homeowners who participated in the Community Advantage Panel Sur-vey, along with a matched sample of similar rental properties from the American Housing Survey, to determine whether low-income homeowners in the United States would have expe-rienced lower housing costs by renting between 2003 and 2011. We calculate the homeown-ers’ user costs directly from the survey data, and we derive hedonic measures of equivalent rent for these homeowners via pooled regressions of house prices and rents on housing char-acteristics, from which we obtain capitalization rates. For the median homeowner in our sample, we find that owning was less costly than renting a comparable property between 2003 and 2011.

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