The Vulnerability of Minority Homeowners in the Housing Boom and Bust
AbstractThis paper examines mortgage outcomes for a large, representative sample of individual home purchases and refinances linked to credit scores in seven major US markets in the recent housing boom and bust. We find that among those with similar credit scores, black and Hispanic homeowners had much higher rates of delinquency and default in the downturn. These differences are not explained by the likelihood of receiving a subprime loan or by differential exposure to local shocks in the housing and labor market and are especially pronounced for loans originated near the peak of the boom. There is also heterogeneity within minorities: black and Hispanics that live in areas with lower employment rates and that have high debt to income ratios are the driving force of the observed racial differences in foreclosures and delinquencies. Our findings suggest that those black and Hispanic homeowners drawn into the market near the peak were especially vulnerable to adverse economic shocks and raise serious concerns about homeownership as a mechanism for reducing racial disparities in wealth.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University of Connecticut, Department of Economics in its series Working papers with number 2014-05.
Length: 42 pages
Date of creation: Feb 2014
Date of revision:
Contact details of provider:
Postal: University of Connecticut 341 Mansfield Road, Unit 1063 Storrs, CT 06269-1063
Phone: (860) 486-4889
Fax: (860) 486-4463
Web page: http://www.econ.uconn.edu/
More information through EDIRC
Mortgage; Foreclosure; Delinquency; Minority; Homeownership; Housing Bust; Wealth Disparities;
Other versions of this item:
- Patrick Bayer & Fernando Ferreira & Stephen L. Ross, 2013. "The Vulnerability of Minority Homeowners in the Housing Boom and Bust," NBER Working Papers 19020, National Bureau of Economic Research, Inc.
- Patrick Bayer & Fernando Ferreira & Stephen L. Ross, 2014. "The Vulnerability of Minority Homeowners in the Housing Boom and Bust," Working Papers 2014-006, Human Capital and Economic Opportunity Working Group.
- Patrick Bayer & Fernando Ferreira & Stephen L. Ross, 2014. "The Vulnerability of Minority Homeowners in the Housing Boom and Bust," Working Papers 2014-006, Becker Friedman Institute for Research In Economics.
- Patrick Bayer & Fernando Ferreira & Stephen Ross, 2013. "The Vulnerability of Minority Homeowners in the Housing Boom and Bust," Working Papers 13-7, Duke University, Department of Economics.
- I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
- J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
- J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing
- R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
This paper has been announced in the following NEP Reports:
- NEP-ALL-2014-03-15 (All new papers)
- NEP-BAN-2014-03-15 (Banking)
- NEP-URE-2014-03-15 (Urban & Real Estate Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Terrell, Henry S, 1971. "Wealth Accumulation of Black and White Families: The Empirical Evidence," Journal of Finance, American Finance Association, vol. 26(2), pages 363-77, May.
- Hayashi, Fumio & Altonji, Joseph & Kotlikoff, Laurence, 1996. "Risk-Sharing between and within Families," Econometrica, Econometric Society, vol. 64(2), pages 261-94, March.
- Brueckner, Jan K., 1986. "The downpayment constraint and housing tenure choice : A simplified exposition," Regional Science and Urban Economics, Elsevier, vol. 16(4), pages 519-525, November.
- Hilary Hoynes & Douglas L. Miller & Jessamyn Schaller, 2012.
"Who Suffers during Recessions?,"
Journal of Economic Perspectives,
American Economic Association, vol. 26(3), pages 27-48, Summer.
- Chris Mayer & Karen Pence, 2008. "Subprime mortgages: what, where, and to whom?," Finance and Economics Discussion Series 2008-29, Board of Governors of the Federal Reserve System (U.S.).
- Paul S. Willen & Adam Hale Shapiro & Kristopher Gerardi, 2008.
"Subprime Outcomes: Risky Mortgages, Homeownership Experiences, and Foreclosures,"
2008 Meeting Papers
345, Society for Economic Dynamics.
- Kristopher Gerardi & Adam Hale Shapiro & Paul S. Willen, 2007. "Subprime outcomes: risky mortgages, homeownership experiences, and foreclosures," Working Papers 07-15, Federal Reserve Bank of Boston.
- Joseph Gyourko & Joseph Tracy, 2013. "Unemloyment and Unobserved Credit Risk in the FHA Single Family Mortgage Insurance Fund," NBER Working Papers 18880, National Bureau of Economic Research, Inc.
- Quercia, Roberto G. & McCarthy, George W. & Wachter, Susan M., 2003.
"The impacts of affordable lending efforts on homeownership rates,"
Journal of Housing Economics,
Elsevier, vol. 12(1), pages 29-59, March.
- Roberto G. Quercia & George W. McCarthy & Susan M. Wachter, . "The Impacts of Affordable Lending Efforts on Home Ownership Rates," Zell/Lurie Center Working Papers 304, Wharton School Samuel Zell and Robert Lurie Real Estate Center, University of Pennsylvania.
- Roberto G. Quercia & George W. McCarthy & Susan M. Wachter, . "The Impacts Of Affordable Lending Efforts On Homeownership Rates," Zell/Lurie Center Working Papers 405, Wharton School Samuel Zell and Robert Lurie Real Estate Center, University of Pennsylvania.
- Robert B. Avery & Kenneth P. Brevoort & Glenn Canner, 2012. "Does Credit Scoring Produce a Disparate Impact?," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 40, pages S65-S114, December.
- Townsend, R.M., 1991.
"Risk and Insurance in Village India,"
University of Chicago - Economics Research Center
91-3, Chicago - Economics Research Center.
- Robert M. Townsend, . "Risk and Insurance in Village India," University of Chicago - Population Research Center 91-3a, Chicago - Population Research Center.
- Kristopher S. Gerardi & Paul S. Willen, 2008.
"Subprime mortgages, foreclosures, and urban neighborhoods,"
Public Policy Discussion Paper
08-6, Federal Reserve Bank of Boston.
- Gerardi Kristopher & Willen Paul, 2009. "Subprime Mortgages, Foreclosures, and Urban Neighborhoods," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 9(3), pages 1-37, March.
- Kristopher S. Gerardi & Paul S. Willen, 2009. "Subprime mortgages, foreclosures, and urban neighborhoods," Working Paper 2009-01, Federal Reserve Bank of Atlanta.
- Foote, Christopher L. & Gerardi, Kristopher & Willen, Paul S., 2008.
"Negative equity and foreclosure: Theory and evidence,"
Journal of Urban Economics,
Elsevier, vol. 64(2), pages 234-245, September.
- Christopher L. Foote & Kristopher Gerardi & Paul S. Willen, 2008. "Negative equity and foreclosure: theory and evidence," Public Policy Discussion Paper 08-3, Federal Reserve Bank of Boston.
- Clapp, John M. & Nanda, Anupam & Ross, Stephen L., 2008.
"Which school attributes matter? The influence of school district performance and demographic composition on property values,"
Journal of Urban Economics,
Elsevier, vol. 63(2), pages 451-466, March.
- John M. Clapp & Anupam Nanda & Stephen L. Ross, 2005. "Which School Attributes Matter? The Influence of School District Performance and Demographic Composition on Property Values," Working papers 2005-26, University of Connecticut, Department of Economics, revised Jan 2007.
- Duca, John V. & Rosenthal, Stuart S., 1994. "Borrowing constraints and access to owner-occupied housing," Regional Science and Urban Economics, Elsevier, vol. 24(3), pages 301-322, June.
- Robert B. Avery & Glenn B. Canner & Robert E. Cook, 2005. "New information reported under HMDA and its application in fair lending enforcement," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), issue Sum, pages 344-394.
- Marsha J. Courchane, 2007. "The Pricing of Home Mortgage Loans to Minority Borrowers: How Much of the APR Differential Can We Explain?," Journal of Real Estate Research, American Real Estate Society, vol. 29(4), pages 399-440.
- Sajeda Amin & Ashok S. Rai & Giorgio Topa, 1999.
"Does Microcredit Reach the Poor and Vulnerable? Evidence from Northern Bangladesh,"
CID Working Papers
28, Center for International Development at Harvard University.
- Amin, Sajeda & Rai, Ashok S. & Topa, Giorgio, 2003. "Does microcredit reach the poor and vulnerable? Evidence from northern Bangladesh," Journal of Development Economics, Elsevier, vol. 70(1), pages 59-82, February.
- Amin, S. & Rai, A.S. & Topa, G., 1999. "Does Microcredit Reach the Poor and Vulnerable? Evidence from Northern Bangldesh," Working Papers 99-06, C.V. Starr Center for Applied Economics, New York University.
- Amin, S. & Rai, A.S. & Topa, G., 2000. "Does Microcredit Reach the Poor and Vulnerable? Evidence from Nothern Bangladesh," Papers 28, Chicago - Graduate School of Business.
- Andrew Haughwout & Donghoon Lee & Joseph Tracy & Wilbert van der Klaauw, 2011. "Real estate investors, the leverage cycle, and the housing market crisis," Staff Reports 514, Federal Reserve Bank of New York.
- Lynn Fisher & Lauren Lambie-Hanson & Paul S. Willen, 2010. "A profile of the mortgage crisis in a low-and-moderate-income community," Public Policy Discussion Paper 10-6, Federal Reserve Bank of Boston.
- Gyourko, Joseph & Linneman, Peter & Wachter, Susan, 1999. "Analyzing the Relationships among Race, Wealth, and Home Ownership in America," Journal of Housing Economics, Elsevier, vol. 8(2), pages 63-89, June.
- Christopher J. Mayer & Karen Pence, 2008. "Subprime Mortgages: What, Where, and to Whom?," NBER Working Papers 14083, National Bureau of Economic Research, Inc.
- Engelhardt, Gary V, 1996. "Consumption, Down Payments, and Liquidity Constraints," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 28(2), pages 255-71, May.
- Kerwin Kofi Charles & Erik Hurst, 2002. "The Transition To Home Ownership And The Black-White Wealth Gap," The Review of Economics and Statistics, MIT Press, vol. 84(2), pages 281-297, May.
Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
- Why so much policy focus on home ownership?
by Economic Logician in Economic Logic on 2013-05-31 14:54:00
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Kasey Kniffin).
If references are entirely missing, you can add them using this form.