The Decision to Own: The Impact of Race, Ethnicity, and Immigrant Status
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Title: The Decision to Own: The Impact of Race, Ethnicity, and Immigrant Status
Author(s): Gary Painter, Stuart Gabriel, and Dowell Myers
Public attention has centered on differences in mortgage application rejection rates for different racial and ethnic minorities. Equally unsettling are the different rates at which these groups tend to become homeowners. Indeed, substantial differences in racial, ethnic, and immigrant homeownership rates fuel the perception that housing market discrimination unfairly denies homeownership to qualified households.
This paper shows that, in total, Latinos and Asians could attain homeownership at the same rate as whites if education, immigrant status, and income were equalized. These findings strongly suggest that public policy can make significant gains in homeownership by emphasizing the educational needs of immigrants, and racial and ethnic minorities. .
This should not be a surprise. Driven by public policy and competitive pressures, market innovation has stretched the reach of the private mortgage market over the past decade. Innovation cannot, however, change the basic equation of affordability. Income still dictates how much a household can afford, and education still drives income. .
Other interesting findings include the fact that increases in minority income produce greater changes in homeownership rates, indicating the relative intensity of the desire to own among minorities. Also, differences in the rate of homeownership become negligible between natives and immigrants after ten years of residency. This suggests rapid financial integration into the U.S. economy for immigrants. .
A troubling finding of the paper is a persistent gap, after controlling for income, education, and immigrant status, in the homeownership rate between whites and African-Americans. This discrepancy may be due to the framework of the study, which focuses exclusively on households that move within Los Angeles County. The authors speculate on potential explanations for this gap. Patterns of black migration to nearby suburbs outside of Los Angeles County, not captured by this study, may explain this difference.