Homeownership Gaps Among Low-Income and Minority Households

Donald R. Haurin

Christopher E. Herbert

Stuart S. Rosenthal

This article reflects the views of the authors and does not necessarily reflect the views of the U.S. Department of Housing and Urban Development.

Although homeownership rates currently stand at historically high levels for all segments of the U.S. population, large gaps in homeownership rates remain when comparing various groups of the population. As of the third quarter of 2006, the non-Hispanic White (hereafter, White) homeownership rate was 76 percent while African-American and Hispanic homeownership rates were below 50 percent and the Asian homeownership rate was 60 percent. The homeownership gap between African-American and White households was larger in 2006 than it was in 1990, while the homeownership gap between Hispanics and Whites was only slightly smaller in 2006 than it was in 1990. Households with very low incomes had a homeownership rate that was 37 percentage points below the rate for high-income households. These gaps have changed little over the past 50 years. The primary goal of this study is to synthesize what is known about the determinants of gaps in homeownership rates by income status and racial and ethnic status. We first present a conceptual framework for analyzing the determinants of homeownership. We then review the literature that identifies the relative importance of various contributing factors to observed homeownership gaps, separating the factors into those that are observed and those that are part of an unexplained residual that represents unmeasured factors such as discrimination, lack of information about the homebuying and mortgage financing processes, and omitted socioeconomic variables.