Despite growth in home ownership rates, a sizeable and persistent racial homeownership gaps, says research from the University of Southern California Lusk Center for Real Estatecolor>.
The study found that a rise in homeownership rates among households since the 1980s was caused largely by improvement in household income. At the same time, substantial gaps in homeownership rates between whites and minorities continued -- averaging about 26 percentage points for blacks and 28 points for Hispanics, according to the study.
In the second quarter of 2004, homeownership rates reached 69 percent nationwide, with 76 percent for non-Hispanic whites, 50 percent for blacks and 47 percent for Hispanics.
Stuart Gabriel, director of the Lusk Centercolor> and co-author of the report said that homeownership increases are driven by such factors as household income, age, size of the household, full-time work, marriage and inheritance.
The study also found blacks and Hispanics are saving more to buy a home, suggesting minority households view home ownership as a far more viable option today than in the past.
But still to be addressed is a need to assure minorities get better access to credit, Gabriel said. "We also need to explore the pricing of loans originated among minority and underserved communities," he said. "In fact, our research has shown borrowers with lower credit scores are less likely to prepay mortgages, resulting in higher returns for investors in these mortgages."
The report suggests lenders should expand the set of factors they use to score the credit worthiness of underserved borrowers by using such indicators as payments for rent and utilities and length of employment.
Also, since minority households are more inclined to purchase a home in urban neighborhoods, there's a greater need for 'closer-in' housing, whether that means urban in-fill new construction or revitalization of existing housing stock, to boost home ownership in the urban core, the report says.