A framework for explaining racial inequality in homeownership sustainability

• In Event: 3520 - Section on Race, Gender, and Class Refereed Roundtables
  In Refereed Roundtable 60min: 2. Homeownership, Poverty, Policing

Abstract

Previous works on the black-white homeownership gap concentrate on housing market dynamics rather than the home-owning family’ broad socioeconomic life. This study proposes a framework for understanding black-white inequality in homeownership sustainability, which emphasizes black homeowners’ socioeconomic challenges that are external to mortgage-market evaluations, with a particular focus on the mediating role of liquid assets. Based on the Panel Study of Income Dynamics (PSID), the framework is put to an empirical test on the differential exit rates between black and white homeowners during the Great Recession. The findings indicate that (1) the racial gap becomes statistically non-significant after liquid wealth is controlled in the model, (2) the inclusion of liquid wealth renders all mortgage-oriented variables non-significant, with regard to either homeownership sustainability in general or the racial disparity in particular, and (3) black and white families had different coping mechanisms during the housing crisis, as white homeowners primarily depended on liquid assets to sustain homeownership while black homeowners relied more on non-liquid assets.

Author

• Chunhui Ren, Delta State University