Does Home Equity Explain the Black Wealth Gap?

49 Pages Posted: 17 Jan 2012 Last revised: 23 Jan 2012

See all articles by Ajamu C. Loving

Ajamu C. Loving

Texas A&M University

Michael S. Finke

The American College

John Salter

Texas Tech University

Date Written: November 6, 2011


Prior Literature has shown that Blacks have lower rates of home ownership, lower amounts of home equity, and experience lower housing appreciation than whites. This paper examines racial differences in the returns to home ownership using a longitudinal survey of middle-aged homeowners. We find that home equity appreciation is much lower for Blacks between 1994 and 2004, however Blacks with high incomes do not experience the same home equity gap. While there are regional differences in negative racial effects, high income Blacks are able to avoid those as well. We find that among those who acquire the largest increase in home equity, being black is not detrimental. We also find that even when we account for differences in home equity growth, racial differences in wealth growth persist.

Keywords: Black wealth, net worth, household finance, home equity, wealth gap, race

JEL Classification: D31, H31, R21, J15, J71

Suggested Citation

Loving, Ajamu C. and Finke, Michael S. and Salter, John, Does Home Equity Explain the Black Wealth Gap? (November 6, 2011). Available at SSRN: or

Ajamu C. Loving

Texas A&M University ( email )

Langford Building A
798 Ross St.
College Station, TX 77843-3137
United States

Michael S. Finke (Contact Author)

The American College ( email )

Bryn Mawr, PA 19010
United States

John Salter

Texas Tech University ( email )

2500 Broadway
Lubbock, TX 79409
United States

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