Essays on the White-Nonwhite Racial Homeownership Gap in the United States
Open AccessAccess to homeownership is crucial for ensuring household well-being. However, Minority households face persistent challenges as their homeownership rates consistently fall below those of their White counterparts. In light of this disparity, this dissertation embarks on three distinct studies to delve into various aspects of the differences in homeownership between White and Nonwhite populations in the United States. The focus of study on Chapter 1 is the homeownership rate at the Census tract level. This Chapter thoroughly investigates the White-Black and White-Hispanic homeownership rate gaps across the entire distribution of homeownership rates, with a particular emphasis on the tail of the distribution. To conduct this analysis, a comparative approach is employed by examining the homeownership rates of White households and Minority households at equivalent percentiles within their respective homeownership rate distributions. A re-weighting decomposition method known as DFL, initially proposed by DiNardo et al. (1995), is utilized to implement a decomposition of the White-Minority gap into two distinct components: one explained by the aggregate demographic and socioeconomic characteristics at the Census tract level, such as the share of the population aged 65 and older and median household income, and the other attributable to unexplained factors. The findings of the study reveal that households residing in tracts with low homeownership rates play a significant role in driving the overall racial homeownership gap in the United States. Moreover, the analysis demonstrates that racial disparities in demographic and socioeconomic factors are the primary drivers of the racial homeownership gap among White, Black, and Hispanic households living in Census tracts characterized by low homeownership rates within their respective racial groups. In contrast, unexplained factors exert a significant influence on the disparities between White and Minority homeownership rates among households residing in Census tracts with higher levels of homeownership. Among the demographic factors examined, the racial disparity in the share of senior citizens emerges as the most influential factor in explaining the White-Black and White-Hispanic homeownership gaps, closely followed by the racial disparity in the share of married-couple families.The second chapter is co-authored with Paul Carrillo (The George Washington University). Chapter 2 aims to analyze the spatial variation observed in both the White-Black homeownership rate gap and the White-Hispanic homeownership rate gap. Notably, this racial homeownership rate gap exhibits significant spatial variation, even within urban areas. This study employs a semi-parametric approach based on sample re-weighting to jointly model location and tenure choices, and decompose the racial gap into two components: a portion that can be explained by differences in demographic characteristics such as education and income, and a portion that remains unexplained. Findings indicate that while differences in demographic characteristics between racial groups account for about one half of the variation in homeownership rate differences across areas, the unexplained portion of the gap exhibits considerable spatial variation and is highly correlated with the racial composition of an area. Specifically, areas with higher proportions of Black and Hispanic residents tend to have smaller homeownership rate racial gaps.Chapter 3 investigates the life-cycle evolution of the White-Black homeownership propensity gap across different household types. This propensity gap refers to the difference in homeownership propensities between Whites and Blacks within the same age cohort. The analysis focuses on the early baby boomer generation in the United States (born between 1946 and 1955), given their significant economic impact. In this paper, the White-Black homeownership propensity gap is estimated using a semi-nonparametric model (SNP), and a difference-in-differences decomposition method is applied to separate the change in the gap across age stages into two components. The first component captures the contribution of changes in the racial difference in demographic and socioeconomic factors, such as marriage, presence of children, income, and more. The second component is attributed to changes in the racial disparities in unexplained factors. The findings indicate that the White-Black homeownership gap widens with age for households with a lower probability of homeownership, while it narrows for households with a relatively higher likelihood of owning a home. Furthermore, the impact of changes in the White-Black difference in demographic and socioeconomic factors on the homeownership propensity gap varies significantly among different types of households. Specifically, shifts in racial disparities related to demographic and socioeconomic factors primarily contribute to the widening of the White-Black homeownership gap among early baby boomer households with a higher likelihood of owning a home. Conversely, in earlier age stages, these shifts initially lead to an expansion of the gap but then transition to narrowing the gap for early baby boomer households with a lower likelihood of homeownership.
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