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Explaining the Black-White Homeownership Gap: The Role of Own Wealth, Parental Externalities and Locational Preferences

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  • Hilber, Christian A. L.
  • Liu, Yingchun

Abstract

African Americans in the United States are considerably less likely to own their homes compared to Whites. Differences in household income and other socio-economic and demographic characteristics can only partially explain this gap and previous studies suggest that the ‘unexplained’ gap has increased over time. In this paper we use the Panel Study of Income Dynamics (PSID) intergenerational data, which provides information on household wealth, parental characteristics and macro-location choice. We find that African-American households are 6.5 percent less likely to own if only traditional explanatory variables are controlled for. However, the black-white homeownership gap disappears if differences in own and parental wealth and in the preferred macro-location type are accounted for.

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  • Hilber, Christian A. L. & Liu, Yingchun, 2007. "Explaining the Black-White Homeownership Gap: The Role of Own Wealth, Parental Externalities and Locational Preferences," MPRA Paper 5136, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:5136
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    Cited by:

    1. Coulson, N. Edward & Dalton, Maurice, 2010. "Temporal and ethnic decompositions of homeownership rates: Synthetic cohorts across five censuses," Journal of Housing Economics, Elsevier, vol. 19(3), pages 155-166, September.
    2. Ha, Sejeong & Hilber, Christian A.L. & Schöni, Olivier, 2021. "Do long-distance moves discourage homeownership? Evidence from England," Journal of Housing Economics, Elsevier, vol. 53(C).
    3. Chan, Sewin & Haughwout, Andrew & Tracy, Joseph, 2015. "How Mortgage Finance Affects the Urban Landscape," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 987-1045, Elsevier.
    4. Laurent Gobillon & Matthieu Solignac, 2020. "Homeownership of immigrants in France: selection effects related to international migration flows [A nation of immigrants: assimilation and economic outcomes in the age of mass migration]," Journal of Economic Geography, Oxford University Press, vol. 20(2), pages 355-396.
    5. Bischoff, Oliver, 2012. "Explaining regional variation in equilibrium real estate prices and income," Journal of Housing Economics, Elsevier, vol. 21(1), pages 1-15.
    6. Salim Furth & MaryJo Webster, 2023. "Single-Family Zoning and Race: Evidence From the Twin Cities," Housing Policy Debate, Taylor & Francis Journals, vol. 33(4), pages 821-843, July.
    7. Shaun A. Bond & Michael D. Eriksen, 2021. "The role of parents on the home ownership experience of their children: Evidence from the health and retirement study," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 49(2), pages 433-458, June.
    8. Hilber, Christian A.L. & Liu, Yingchun, 2008. "Explaining the black-white homeownership gap: The role of own wealth, parental externalities and locational preferences," Journal of Housing Economics, Elsevier, vol. 17(2), pages 152-174, June.
    9. Tracy M. Turner & Marc T. Smith, 2009. "Exits From Homeownership: The Effects Of Race, Ethnicity, And Income," Journal of Regional Science, Wiley Blackwell, vol. 49(1), pages 1-32, February.
    10. Lin, Zhenguo & Liu, Yingchun & Xie, Jia, 2021. "Banking deregulation and homeownership," Journal of Housing Economics, Elsevier, vol. 52(C).
    11. Laurent Gobillon & Matthieu Solignac, 2014. "Homeownership of immigrants in France," ERSA conference papers ersa14p558, European Regional Science Association.
    12. Zorlu, Aslan & Mulder, Clara H. & van Gaalen, Ruben, 2014. "Ethnic disparities in the transition to home ownership," Journal of Housing Economics, Elsevier, vol. 26(C), pages 151-163.
    13. Prashant Das & N. Edward Coulson & Alan Ziobrowski, 2019. "Caste, Faith, Gender: Determinants of Homeownership in Urban India," The Journal of Real Estate Finance and Economics, Springer, vol. 59(1), pages 27-55, July.
    14. Rebbeca Tesfai, 2017. "Continued Success or Caught in the Housing Bubble? Black Immigrants and the Housing Market Crash," Population Research and Policy Review, Springer;Southern Demographic Association (SDA), vol. 36(4), pages 531-560, August.
    15. Renata Bottazzi & Thomas Crossley & Matthew Wakefield, 2012. "Late starters or excluded generations? A cohort analysis of catch up in home ownership in England," IFS Working Papers W12/10, Institute for Fiscal Studies.
    16. Durba Chakrabarty & Michael J. Osei & John V. Winters & Danyang Zhao, 2019. "Which immigrant and minority homeownership rates are gaining ground in the US?," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 43(2), pages 273-297, April.
    17. Caryn N. Bell & Jordan Kerr & Jessica L. Young, 2019. "Associations between Obesity, Obesogenic Environments, and Structural Racism Vary by County-Level Racial Composition," IJERPH, MDPI, vol. 16(5), pages 1-17, March.
    18. Mayock, Tom & Malacrida, Rachel Spritzer, 2018. "Socioeconomic and racial disparities in the financial returns to homeownership," Regional Science and Urban Economics, Elsevier, vol. 70(C), pages 80-96.
    19. James Conklin & Kristopher Gerardi & Lauren Lambie-Hanson, 2022. "Can Everyone Tap Into the Housing Piggy Bank? Racial Disparities in Access to Home Equity," FRB Atlanta Working Paper 2022-17, Federal Reserve Bank of Atlanta.
    20. Chakrabarty, Durba & Osei, Michael J. & Winters, John V. & Zhao, Danyang, 2017. "Are Immigrant and Minority Homeownership Rates Gaining Ground in the US?," IZA Discussion Papers 10852, Institute of Labor Economics (IZA).
    21. Mundra, Kusum & Uwaifo Oyelere, Ruth, 2013. "Determinants of Immigrant Homeownership: Examining their Changing Role during the Great Recession and Beyond," IZA Discussion Papers 7468, Institute of Labor Economics (IZA).
    22. Turner, Tracy M. & Luea, Heather, 2009. "Homeownership, wealth accumulation and income status," Journal of Housing Economics, Elsevier, vol. 18(2), pages 104-114, June.
    23. Lee, Hyojung & Myers, Dowell & Painter, Gary & Thunell, Johanna & Zissimopoulos, Julie, 2020. "The role of parental financial assistance in the transition to homeownership by young adults," Journal of Housing Economics, Elsevier, vol. 47(C).
    24. Chunhui Ren, 2020. "A Framework for Explaining Black-White Inequality in Homeownership Sustainability," Demography, Springer;Population Association of America (PAA), vol. 57(4), pages 1297-1321, August.

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    More about this item

    Keywords

    Homeownership; housing tenure choice; location choice; wealth effects; intergenerational effects;
    All these keywords.

    JEL classification:

    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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