The Homeownership Experience of Minorities During the Great Recession

30 Pages Posted: 16 Feb 2017 Last revised: 17 Jul 2019

See all articles by Charles S. Gascon

Charles S. Gascon

Federal Reserve Bank of St. Louis

Lowell Ricketts

Federal Reserve Banks - Federal Reserve Bank of St. Louis

Don Schlagenhauf

Federal Reserve Banks - Federal Reserve Bank of St. Louis

Date Written: 2017

Abstract

It has been argued that during the Great Recession, wealth losses were more concentrated for college-­educated Black and Hispanic families than for White and Asian college-educated families and their non-college-educated Black and Hispanic peers. This article explores the extent to which the homeownership experience for families who purchased homes between 2004 and 2008 is a potentially impor­tant factor in explaining this finding. During the housing boom, the increase in homeownership for Blacks and Hispanics was very similar, but the second group had a smaller decline. Despite these differences, the Great Recession was far more destructive for these minorities regardless of income. Logit regressions show that underwriting standards and loan structure explain a significant amount of the non-White–White gap in foreclosures. However, geographic concentration was most significant in explaining the gap for Hispanic borrowers. Despite accounting for these factors, sizable gaps in the likelihood of foreclosure remain between Blacks and Hispanics relative to Whites.

JEL Classification: J15, R2

Suggested Citation

Gascon, Charles S. and Ricketts, Lowell and Schlagenhauf, Don, The Homeownership Experience of Minorities During the Great Recession (2017). Review, Vol. 99, Issue 1, pp. 139-167, 2017. Available at SSRN: https://ssrn.com/abstract=2918740 or http://dx.doi.org/10.20955/r.2017.139-67

Charles S. Gascon (Contact Author)

Federal Reserve Bank of St. Louis ( email )

411 Locust St
Saint Louis, MO 63011
United States

Lowell Ricketts

Federal Reserve Banks - Federal Reserve Bank of St. Louis ( email )

411 Locust St
Saint Louis, MO 63011
United States

Don Schlagenhauf

Federal Reserve Banks - Federal Reserve Bank of St. Louis ( email )

P.O. Box 442
St. Louis, MO 63166-0442
United States

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