Racial differences in homeownership: the effect of residential location

Abstract

The rate of homeownership among African-American households is considerably lower than white households in American urban areas. This paper examines whether racial differneces in residential location outcomes are among the factors that contribute to the large racial differences in homeownership rates in major US metropolitan areas. Based on the 1985 metropolitan sample of the American Housing Survey for Philadelphia, the paper does not find any evidence that existing racial differences in residential location in Philadelphia decrease the homeownership rate among African Americans. Rather, the empirical evidence suggests that African-American residential location outcomes are associated with lower than expected racial differences in homeownership. Therefore, after controlling for neighborhood, racial differences in homeownership are larger than originally believed, and the ability of racial differences in endowments to explain hoeownership differences is more limited.Journal of Economic Literature Classification: R21, J15, D12

Explaining the black–white homeownership gap: The role of own wealth, parental externalities and locational preferences

“…This is not to say that location choices are per se exogenous to housing tenure decisions. Rather, similar to Deng et al (2003) we conjecture that micro-location (neighborhood) choices and tenure choices may be simultaneously determined.…”

“…In a similar vein, Deng et al (2003) investigate whether racial differences in residential location outcomes are among the factors contributing to the large racial differences in homeownership rates in the Philadelphia metro area. More specifically, the empirical analysis is based on 1985 AHS data for the MSA of Philadelphia and considers the influence of neighborhood location options on homeownership endogenously based on a nested multinomial logit specification.…”

Operationalizing the concept of neighborhood: Application to residential location choice analysis

“…Quigley,1985;Gabriel and Rosenthal, 1989;Waddell, 1993 and1996;Rapaport, 1997;Levine, 1998;Nechyba and Strauss, 1998;Chattopadhyay, 2000;Sermons and Koppelman, 2001;and Deng, Ross, and Wachter, 2003).…”

“…In almost all of the past residential location choice analyses that have adopted the GAC model, the spatial groupings are interpreted as alternative neighborhoods of residence and are conceived as commodities with fixed, clearly defined, boundaries based on administratively defined units such as census tracts (e.g. Lerman, 1975;Sermons and Koppelman, 2001), school districts (Nechyba and Strauss, 1998), or TAZs (Waddell, 1996;Deng, Ross, and Wachter, 2003). The neighborhood characteristics are then constructed accordingly.…”

The Vulnerability of Minority Homeowners in the Housing Boom and Bust

“…2 Oliver and Shapiro (1997) also estimate that the financial assets and net worth of black households nearing retirement (aged 50-64) were only 14 and 20 percent of those of white households, respectively, while the analogous figure for income was 67 percent. Also see Deng, Ross and Wachter (2003), Gyourko, Linneman, Wachter (1999), Duca andRosenthal (1991, 1994), Wachter, S.M., Megbolugbe (1992), Linneman, Wachter, (1989) on the role of borrowing constraints in explaining the black-white homeownership gap. impact of the downturn by race and ethnicity.…”