Journal of Real Estate Finance and Economics, 23:3, 411±434, 2001
# 2001 Kluwer Academic Publishers. Manufactured in The Netherlands.
Have the Doors Opened Wider? Trends in
Homeownership Rates by Race and Income
RAPHAEL W. BOSTIC
Board of Governors of the Federal Reserve System, Mail Stop 153, 20th and C Streets NW, Washington,
BRIAN J. SURETTE
Freddie Mac, 8200 Jones Branch Drive, McLean, VA 22102
Homeownership among U.S. families increased notably in recent years, from 63 percent in 1989 to 66.2 percent in
1998. This article examines this trend and the factors contributing to it. We ®nd that (1) homeownership rose for
all racial, ethnic, and income groups; (2) the differences in homeownership between minority and nonminority
families and between middle-income and lower-income families declined signi®cantly; and (3) changes in
family-related characteristics explain homeownership trends among only the top two income quintiles. Among
the lower two income quintiles, family-related characteristics explain almost none of the increase in
homeownership. This pattern suggests that the favorable economic climate of the last decade, changes in
mortgage and housing markets, and changes in the regulations governing those markets account for the increase
in homeownership among lower-income families.
Key Words: homeownership, race, income, Community Reinvestment Act, credit scoring
Homeownership has long been viewed as a milestone for families and an important
contributor to economically vibrant communities. Efforts to foster homeownership have
been widespread among bothpublic and private organizations, and buying a home
consistently ranks among the top reasons for saving (among renters) in national surveys. It
is not surprising, then, that the majority of U.S. families own their primary residence.
Moreover, in recent years the percentage of families who own their homes has risen
substantiallyÐfrom 63.9 percent in 1989 to 66.2 percent in 1998. Though small in
percentage terms, these statistics indicate that an additional 8 million families acquired a
home in just a decade. This article's main objectives are to identify the types of families
driving these trends and to identify the factors contributing to their increased rates of
Part of the growth in homeownership is undeniably due to the booming U.S. economy.
After falling during the 1991 recession, labor force participation, employment, and real
incomes all have risen above their 1989 levels, and throughout this period mortgage
interest rates have remained near historic lows. On the other hand, such aggregate statistics