The racial divide in home ownership remains substantial, despite an overall growth in the national home-ownership rate, the University of Southern California Lusk Center for Real Estate reported today.
In the second quarter of 2004, the national home-ownership rate reached 69 percent, and that rate was 76 percent for non-Hispanic whites. The home-ownership rate for African Americans, though, was 50 percent, and it was 47 percent for Hispanics, according to the study, "Homeownership in the 1980s and 1990s: Aggregate Trends and Racial Gaps."
"Home-ownership increases are driven by such factors as household income, age, size of the household, full-time work, marriage and inheritance," said Stuart Gabriel, director of the Lusk Center and an author of the study. Stuart Rosenthal of Syracuse University's Center for Policy Research teamed with Gabriel in the study of home-ownership rates.
He also said there is a need to boost minority home ownership because it can serve as a wealth generator and can help to revitalize neighborhoods by reducing crime and blight, increasing price appreciation and improving outcomes for children. "Clearly, the benefits of home ownership can extend well beyond the build-up of equity to help revitalize communities," he said.
The national home-ownership rate improved by about 0.5 percent from 1983-89 and rose 3.5 percent from 1990-2001, while the gap in homeownership between whites and minorities changed little, according to the report. President Bush has said there is a need to boost minority home ownership, and he set a goal of 5.5 million new minority homeowners by 2010.
Credit barriers accounted for no more than 5 percentage points of the disparities in the home-ownership rates, according to the study, while location and household socio-demographic attributes, such as income, age, marital status, health, size of household, employment status and inheritance, accounted for most of this gap.
"An important implication of these findings is that the gain in home ownership in the 1990s appears to have been driven primarily by household demographic factors that had little to do with government and industry initiatives," the study states.
The data also suggests that "innovations in mortgage finance and declining interest rates, while clearly beneficial to prospective homeowners, likely were not the primary drivers of the rise in home ownership during the 1990s."
Authors of the study used statistics from the Federal Reserve Board's Survey of Consumer Finances from 1983-2001. An analysis of these statistics found that there is a higher propensity for home ownership among household heads who are married or have previously been married.
Also, home ownership increases with the age of the household head, household size, income, receipt of an inheritance, full-time work, and stable employment, the latter of which is inversely related to the number of previous full-time jobs held by the household head," according to the study.
"In contrast, the propensity for home ownership is reduced if the household head is in poor health or of minority status," the authors also note. And "as of 2001, for example, household attributes account for roughly 15 percentage points of the white-minority home-ownership gap for both African Americans and Hispanics."
There has been an increasing percentage of African-American and Hispanic renters who are saving to purchase a home, the study also found. In 1983, an estimated 6.8 percent of African-American renters and 8.5 percent of Hispanic renters were saving to buy a home, compared with 12.4 percent of white renters. In 2001, an estimated 16 percent of African-American renters, 22 percent of Hispanic renters and 17 percent of white renters were saving up for a home, according to the study.
Location can also play a significant role in home costs and home-ownership rates, according to the study. "African Americans and Hispanics are disproportionately concentrated in central-city locations and, as a result, may face systematically different costs of home ownership relative to the typical suburban white household," the study found.
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