Pathways to Homeownership: An Analysis of the Residential Location and Homeownership Choices of Black Households in Los Angeles

Abstract:     
Recent studies have documented substantially depressed levels of homeownership among African-American households. While prior analyses have focused largely on racial disparities in household financial characteristics, few studies have assessed the potential role of location choice and locational attributes in the homeownership choice decision. This research applies individual-level Census data from the Los Angeles area to explicitly model the residential location and tenure choice decisions of African-American households.

Research findings indicate substantial variation across African-American and white households in the determinants of locational choice among South Central L.A., other parts of Los Angeles, and Inland Empire (San Bernardino County) areas. The predicted location choice of white households was overwhelmingly that of suburban areas of Los Angeles County; in contrast, the typical African-American household was nearly as likely to locate in South Central Los Angeles as in other parts of the County. Further, the probability of white household moves to South Central Los Angeles was relatively insensitive to simulated variation in household socio-economic characteristics and remained throughout at approximately 2 percent. While higher levels of household income exerted significant positive effects on the likelihood of black moves to the Inland Empire, the opposite outcome was shown for white households.

Among blacks that move to San Bernardino County or to South Central Los Angeles, imputation of white economic endowments served to fully close the sizable black-white homeownership choice gap. However, in other Los Angeles neighborhoods, a sizable endowment-adjusted homeownership gap was shown to persist. Overall, assessment of variations in the intra-metropolitan locational and tenure choices of black households indicated several distinct "pathways" to homeownership among black households in Los Angeles. In so doing, the analysis accounted for in excess of three-fourths of the gap in homeownership rates between Los Angeles white and black households.

Number of Pages in PDF File: 34

Keywords: Tenure choice, Housing Demand, Location Choice, Racial Differences

JEL Classification: R21

working papers series