Journal of Real Estate Finance and Economics, 27:1, 87±109, 2003
# 2003 Kluwer Academic Publishers. Manufactured in The Netherlands.
Pathways to Homeownership: An Analysis of the
Residential Location and Homeownership Choices of
Black Households in Los Angeles
Lusk Center for Real Estate, Marshall School of Business and School of Policy, Planning, and Development,
University of Southern California, Los Angeles, CA, 90089-0626, USA
Lusk Center for Real Estate, School of Policy, Planning, and Development, University of Southern California,
Los Angeles, CA, USA
Recent studies have documented substantially depressed levels of homeownership among African-American
households. While prior analyses have focused largely on racial disparities in household ®nancial characteristics,
few studies have assessed the potential role of location choice and locational attributes in the homeownership
choice decision. This research applies individual-level Census data from the Los Angeles area to explicitly model
the residential location and tenure choice decisions of African-American households. Research ®ndings indicate
that there is substantial variation across African-American and white households in the determinants of locational
choice among South Central LA, other parts of Los Angeles, and Inland Empire (San Bernardino County) areas.
In addition, African-American and white households are found to differ in how location characteristics impact in
their tenure choices. Overall, after accounting for location, the empirical analysis served to explain three-fourths
of the 23 percentage point gap in homeownership rates between Los Angeles white and black households,
whereas models that lack controls for location accounted only for about one-half of the observed gap.
Key Words: tenure choice, housing demand, location choice, racial differences
Recent years have witnessed substantial academic research and policy debate regarding
access to homeownership, particularly among racial and ethnic minorities (see, for
example, Painter et al., 2001; Wachter and Megbolugbe, 1992; Gyourko and Linneman,
1996; and Coulson, 1999). In part, the debate derives from sizable and persistent gaps in
homeownership attainment between white and minority households. While the United
States homeownership rate rose perceptibly over recent years to a record 67.1 percent in
mid-2000, the longstanding white-minority homeownership gap of about 28 percentage
points was little changed. By late 1999, close to 74 percent of whites had achieved
homeownership status, compared with only about 46 percent of African-American and
* Corresponding author.