When Kids Lose Their Homes
The ABLJ just published a new paper, Parents in Financial Crisis: Fighting to Save the Family Home. The paper uses data from the 2001 Consumer Bankruptcy Project to examine the differences in how hard people struggle to save a home based on the presence--or absence--of minor children in the house. The data support the claim that families with children work harder to try to hang on to home both before and during bankruptcy. The finding is consistent with the thesis that families buy homes as a way to buy opportunities for their children (schools, neighborhoods) and that the potential loss of a home is more painful to parents who fear the lifetime impact of the loss on their children.
The data pre-date the current mortgage crisis, but they are useful on several levels for thinking about what is happening now. At one level, the data reported in Parents in Financial Crisis are a reminder of the impact of a wave of foreclosures. For adults to pick up stakes and move to a rental in a less desirable part of town can be painful, but they can go to the same work every day and continue the same after-work activities. For a child, however, foreclosure may mean transferring to a weaker school, losing a chance to play in the band or on a softball team, dropping out of a scout troop, and losing all the friends she has ever known. Sure, we're a highly mobile society, and children move all the time. But a move to a nicer house or a move so mom can take a better job is a move that most parents undertake at least in part with an eye toward improving a child's lifetime chances. A move from a foreclosure is not a move up.
The paper is written by Eric Nguyen, a Harvard 3L with a strong quantitative background. (Note to entry level hiring committees: Remember his name--he's very good.) Eric had read The Two-Income Trap and pointed out that if we were right about families and homes, there should be a difference among bankrupt families between home-owning parents and home-owning nonparents and the lengths to which they went to save their homes. He dug into the data on his own and found some very interesting correlations, all pointing in the same direction. The data show that among economically distressed families, and controlling for household income and several other factors, those with children were nearly twice as likely to scramble to hang on to their homes than those without children.
The paper is a powerful reminder of the urgency of dealing with the current housing crisis. Several million kids will be affected by the outcome.