A Framework for Explaining Black-White Inequality in Homeownership Sustainability

Abstract

To explain racially differential housing outcomes, previous studies tend to concentrate on discriminatory processes within the mortgage market while ignoring the home-owning family's broad socioeconomic challenges. This study proposes a conceptual 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 recent housing crisis. The findings indicate that (1) the racial gap in homeownership exit is eliminated after liquid wealth is controlled in the model alongside other covariates and (2) the inclusion of liquid wealth renders all mortgage-oriented variables nonsignificant with regard to their explanatory power for Black-White inequality in exit rates. Policy implications of the findings are also discussed.

Do Racial and Ethnic Disparities in Savings and Job Loss during COVID-19 Explain Disparities in Housing Hardships? A Moderated Mediation Analysis

“…Research has identified disparities in both short-term and long-term assets as key drivers of differences in an array of housing outcomes, including homeownership, mortgage delinquencies, and foreclosures (Bayer et al 2017; Ren 2020). Our results reinforce prior research demonstrating this link, but also suggest that racial and ethnic differences in housing hardships—at least in the context of the COVID-19 pandemic—are primarily explained by factors other than liquid assets.…”

“…The disparities in the economic impacts of the pandemic have led to disparities in a wide variety of hardships, including food insecurity (Hardy and Logan 2020; Schanzenbach and Pitts 2020), the rate of skipping essential bill payments (Despard et al 2020), and eviction/foreclosure rates (Grinstein-Weiss et al 2020), yet the pandemic did not cause these disparities. Rather, it only exacerbated preexisting inequalities in income and access to quality health care (Smedley, Stith, and Nelson 2003), housing insecurity (Desmond and Gershenson 2017; Medina et al 2020), wealth (Ren 2020), and other social determinants of health (Haynes, Cooper, and Albert 2020).…”

Consumption and Economic Security: A Two-Stage Conceptualization of Sustainable Homeownership in the United States

“…For example, using the KHB (Karlson-Holm-Breen) method to compare model coefficients, Ren (2020) verified a significant role of liquid assets in mediating race-and income-based differential rates of homeownership exit. In this study, we follow Ren (2020) and differentiate between two types of assets: liquid assets that can be readily converted to cash (e.g., bank accounts) and nonliquid assets whose conversion to cash incurs substantial transaction costs (e.g., automobiles) (McKernan, Ratcliffe and Vinopal 2009).…”

“…Given its utmost importance and extreme complexity, we decide that a racial dimension of the homeownership process shall be explored with separate efforts that target the specific experiences of minority households (See Ren (2020) for example). In the present study, therefore, race/ethnicity variables are included strictly as covariates, so that racial/ethnic dynamics can be effectively accounted for alongside other control variables (e.g., life-course characteristics).…”

US baby boomers’ homeownership trajectories across the life course: A Sequence Analysis approach

“…Researchers often use point-in-time measures by comparing homeownership rates or the odds of ownership by subgroups cross-sectionally (Chakrabarty et al 2018;Coulter 2017;Galster and Wessel 2019). Acknowledging the limitations of such 'snapshot' approaches, some utilize information across two or more time points, focusing on particular transitions, for instance exits from homeownership (Ren 2020), or first homeownership among young adults (Kurz 2004;Sánchez 2018). Hirschl and Rank's (2010) life table estimates cover ages between 25 and 55, but they focus on specific events (transitions into, out of, and return to homeownership), not continuous patterns over the life course.…”