Recent studies have documented substantially depressed levels of homeownership among African-American households. While prior analyses have focused largely on racial disparities in household financial 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 findings 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.
The Journal of Real Estate Finance and Economics – Springer Journals
Published: Oct 4, 2004
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