LOS ANGELES - Higher household incomes, better employment opportunities and demographic changes explain nearly all of the 3.5 percent increase in the overall homeownership rate reported by the Federal Reserve data during the 1990s, according to a study by the Research Institute for Housing
America titled "Causes of the Increase in Homeownership in the 1990s: A Retrospective View," by professors Stuart Rosenthal of Syracuse University and Stuart Gabriel of the USC Lusk Center for Real Estate.
The research focused on factors that influence the homeownership gap between minority and non-minority households. The study used extensive data from the
Federal Reserve Board's Survey of Consumer Finances to explain the factors behind homeownership rate changes in the 1990s.
"The results of the study highlight the key role that a strong and growing economy plays for raising the homeownership rates, especially for minority households," Doug Duncan, MBA's chief economist and senior vice
president of research and business development, said. "The importance of households having a good job with steady income cannot be overstated. This allows them to accumulate savings for a down payment and carry monthly payments.
Mortgage lenders, nonetheless, continue to work hard at bringing new products and programs to the market to assist qualified minority families in getting mortgage credit."
The study suggests that households with blemished credit records and with recent experiences of being constrained in their ability to obtain credit can face barriers to homeownership. The study found that this barrier did
not go away in the 1990s.
Rosenthal and Gabriel found that the homeownership gap between white and both Hispanic and black homeownership rates in 2001 did not substantially decrease from 1989 levels. However, the study does reveal that by 2001
the disproportionate influence of credit barriers on homeownership for blacks relative to whites largely has disappeared.
The professors also reported the discovery of a sharp increase in the number of minority renter households that are saving for a home purchase. The proportion of white households saving for this purpose remained in the
15 percent to 20 percent range throughout most of the 1990s. By 2001 the fraction of minority renters who were saving to purchase a home equaled or exceeded that of white renters, according to the research results.
The results did not suggest that any fundamental shift in household homeownership over renting took place in the 1990s. This is a surprising result given that households faced much-reduced financing costs, many new mortgage products, and the emphasis on homeownership by both the media and political leaders, according to the research. The authors point out, however, that such factors still could have lowered the cost of mortgage credit for some homeowners and also may well have made it possible to
obtain homeownership earlier.