Alternative Measures of Homeownership Gaps Across Segregated Neighborhoods

Abstract

The dramatic rise in the U.S. home ownership rate from 64% in 1996 to almost 70% in 2005 has prompted increased attention to the relation between home ownership and demographic characteristics of households. The recent rise and sharp decline of subprime lending will likely spur further interest in home ownership gaps. Statistical analysis of these differences or “gaps” in home ownership between white and minority households has evolved into a highly stylized comparison of differences in home ownership at the mean or the conditional mean. This study implements a quantile decomposition technique that identifies the unexplained portion of the gap not only at the mean, but at every percentile of the home ownership distribution. Results suggest that differences in home ownership gaps at the mean reflect a combination of small differences at the upper end and much larger gaps at the lowest end of the distribution of homeowners. This study also adds credit history to the factors that are used to explain home ownership gaps.