Homeownership Gaps Among Low-Income and Minority
Borrowers and Neighborhoods (March 2005, 271 p.)
Homeownership rates currently stand at historically high
levels for all segments of the U.S. population. Nevertheless,
dramatic gaps in homeownership rates have been stubbornly
present over the last several decades, and even increased
somewhat during the decade of the 1990s. As of 2004, the white
homeownership rate was 76 percent while African-American and
Hispanic homeownership rates remained below 50 percent, and
the Asian rate was 60 percent. At the same time households
with very-low income had a homeownership rate that was 37
percentage points below the rate for high-income households.
Understanding the determinants of homeownership rates and
gaps is important because homeownership is widely believed
to provide a variety of benefits for both individuals and
communities. Homeownership expands individual opportunities
to accumulate wealth, enables a family to exert greater control
over its living environment, creates incentives for households
to better maintain their homes, and may benefit children of
homeowners. Homeownership also benefits local neighborhoods
because owner-occupiers have a financial stake in the quality
of the local community.
In light of the many potential benefits of homeownership,
the fact that homeownership rates first declined and then
stagnated during the 1980s and into the early 1990s became
a cause for concern for the federal government. First, Secretary
Jack Kemp set a goal and initiated efforts to create one million
new homeowners. Then in 1994, at the President’s request,
the U.S. Department of Housing and Urban Development (HUD)
began work to develop a National Homeownership Strategy with
the goal of lifting the overall homeownership rate to 67.5
percent by the end of the year 2000. While the most tangible
goal of the National Homeownership Strategy was to raise the
overall homeownership rate, in presenting the strategy HUD
pointed explicitly to declines in homeownership rates among
low-income, young, and minority households as motivation for
these efforts. And in June of 2002, President Bush announced
a joint public/private initiative to increase minority homeownership
by 5.5 million households by the year 2010.
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