Exits From Homeownership: The Effects of Race, Ethnicity, and Income*

Abstract

ABSTRACT. This paper examines the extent to which populations experiencing low homeownership rates in the U.S. also experience high homeownership exit rates. We determine whether low-income Hispanic and black households that achieve homeownership are as likely as white and high-income households to sustain it. Using the Panel Study of Income Dynamics spanning the years 1970-2005, we find that low-income homeowners consistently have higher homeownership exit rates, Hispanic households have higher raw exit rates prior to but not subsequent to 1997, and a black/white sustainability gap appears to arise post-1997.

Homeownership Across the American Life Course: Estimating the Racial Divide

“…The race effect was net of gender, marital status, age, veteran status, disability status, family size, permanent income, total family wealth, residential status, and education. They also analyzed the likelihood of exiting homeownership and found that, at least among low-income families, race was a statistically significant and substantial factor in exits from homeownership (see also Turner and Smith 2009).…”

Homeownership, wealth accumulation and income status

“…Households suffering a permanent income shock cannot easily get out from under the financial commitment of homeownership as the process of selling a home can be time consuming and costly. Moreover, LMI homeowners are substantially more likely to exit homeownership than other households (Turner and Smith, 2009), and housing instability will tend to mitigate the wealth creation effects of homeownership (Boehm and Schlottmann, 2004). Finally, as we note in Section 2, it is not clear that LMI households are reaping the gains of real house-price appreciation on their homes.…”

“…6 See Dietz and Haurin (2003) for a thorough discussion of the econometric issues that may arise when estimating the consequences of homeownership. 7 Numerous studies have documented the importance of wealth as a determinant of homeownership (e.g., Henderson and Ioannides, 1987;Linneman and Wachter, 1989;Haurin, 1991;Haurin et al, 1994;Engelhardt and Mayer, 1994;Gyrourko et al, 1999;Charles and Hurst, 2002;Gyourko, 2003, Turner andSmith, 2009;Hilber and Liu, 2008).…”

Socio-demographic Variations of Homeowners and Differential Effects of Parental Homeownership on Offspring's Housing Tenure

“…They estimated that among low-income families who lost their ownership, only 37 per cent later returned to owner status. Based on PSID data from 1970-2005, Turner & Smith (2009 also found that low-income families were less likely to sustain homeownership than high-income families, and the gap in sustainability by income-level increased after 1997. Thus, families could move from renting an apartment to owning a single-family home, or families could live in an owned single-family home for a few years and return to a rented home.…”

“…Williams et al (2005) discussed a new form of inequality in mortgage lending; blacks and residents of minority neighbourhoods were far more likely than others to obtain loans from subprime lenders. Low-income homeowners were more likely to return to renting than their higher-income counterparts (Boehm & Schlottmann, 2004;Turner & Smith, 2009). …”