Analyzing the Relationships Among Race, Wealth, and Home Ownership in America

27 Pages Posted: 9 Jan 2018

See all articles by Joseph Gyourko

Joseph Gyourko

University of Pennsylvania - Real Estate Department; National Bureau of Economic Research (NBER)

Peter Linneman

University of Pennsylvania - Real Estate Department

Susan M. Wachter

University of Pennsylvania - Wharton School, Department of Real Estate ; University of Pennsylvania - Finance Department

Date Written: December 30, 1998

Abstract

This paper presents new evidence on the determinants of the large disparities in home ownership by race in the U.S. Consistent with results first reported by P. Linneman and S. M. Wachter (1989, AREOFA J. 7, No. 4, 389-402), we find no ceteris paribus racial differences in ownership rates among white and minority households who possess sufficient wealth to meet down payment and closing cost requirements associated with standard mortgage underwriting criteria. However, substantial racial differences among wealthconstrained households exist, with constrained whites owning at higher rates than observationally equivalent minority households. Because minorities are disproportionately constrained by wealth-related underwriting standards, these differentials apply to roughly one-third of the white households in our samples and well over one-half of the minority sample. A multinomial model that treats central city versus suburban location as a choice variable in addition to tenure status is also estimated. The results show that even among households unconstrained by wealth-related underwriting considerations, minorities are much more likely than whites to own in central city locations. Thus, while controlling for wealth constraint status does eliminate tenure choice differences among the unconstrained, location differences remain for this group. They also are present among constrained households. Given the disparate fortunes of central city and suburban land markets in many metropolitan areas, this racial location pattern of ownership may have important long-run impacts on wealth distribution by race.

Suggested Citation

Gyourko, Joseph E. and Linneman, Peter D. and Wachter, Susan M., Analyzing the Relationships Among Race, Wealth, and Home Ownership in America (December 30, 1998). Journal of Housing Economics, Vol. 8, 1999. Available at SSRN: https://ssrn.com/abstract=3099214

Joseph E. Gyourko

University of Pennsylvania - Real Estate Department ( email )

Philadelphia, PA 19104-6330
United States
215-898-3003 (Phone)
215-573-2220 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Peter D. Linneman

University of Pennsylvania - Real Estate Department ( email )

Philadelphia, PA 19104-6330
United States

Susan M. Wachter (Contact Author)

University of Pennsylvania - Wharton School, Department of Real Estate ( email )

The Wharton School
3620 Locust Walk
Philadelphia, PA 19104-6330
United States
215-898-6355 (Phone)

HOME PAGE: http://real.wharton.upenn.edu/~wachter/index.html

University of Pennsylvania - Finance Department ( email )

The Wharton School
3620 Locust Walk
Philadelphia, PA 19104
United States

HOME PAGE: http://real.wharton.upenn.edu/~wachter/index.html

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