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

Abstract

Recent studies have documents substantially depressed levels of homeownership among African-American households. While prior analysis 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 that there is 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. In addition, African-American and white households are found to differ in how location characteristics impact in their tenure choices. Overall, after accounting for location, the empirical analysis served to explain three-fourths of the 23 percentage point gap in homeownership rates between Los Angeles white and black households, whereas models that lack controls for location accounted only for about one half of the observed gap.

Keywords: tenure choice, housing demand, location choice, racial differences