2003
Abstract:
Recent academic and policy analyses have sought to explicate the persistently depressed levels of
black and Latino homeownership. While prior research has focused largely on racial disparities
in household endowments (see, for example, Bostic and Surette (2001), Gabriel and Painter
(2001), Painter, Gabriel, and Myers (2001), Wachter and Megbolugbe (1992), Gyourko and
Linneman (1996), and Coulson (1999)), few studies have jointly modeled the structure and
determinants of the household mobility, residential location, and homeownership decisions. The
intra-metropolitan mobility and residential location choices of minority and white households
may vary considerably, owing in part to the different endowments, constraints, and locational
preferences of those groups. An improved understanding of the linkages between those decisions
and housing tenure choice may yield new insights and better-informed policies to enhance
minority homeownership.
This paper estimates a three-level nested multinomial logit model of household intra-metropolitan
mobility, residential location, and homeownership choice. In so doing, the study applies
individual level 1990 Census data to test relevant economic, demographic, and neighborhood
hypotheses. The model is then simulated to assess the effects of changes in household
endowments, neighborhood racial composition and other amenities on the intra-metropolitan
mobility, residential location, and tenure choices of minority and white households.
Research findings indicate significant variability in intra-metropolitan mobility, residential
location, and tenure choice among white and minority households. The inclusive values of the
three-level nested logit model are statistically significant, indicating the appropriateness of the
tiered specification of household mobility, residential location, and homeownership decisions.
Simulated shocks to household endowments and neighborhood characteristics reveal varied
effects across the racial groups and locations. For example, attribution of white endowment
characteristics to black households serves to appreciably raise black homeownership rates in
virtually all Los Angeles area counties—so as to close the white-black gap in homeownership by
a full 17 percentage points. In the context of this shock, black rates of homeownership move up
to 41 percent in the Los Angeles metropolitan area (compared to 53 percent for whites), reflecting
strong homeownership gains in the relatively higher income counties of Los Angeles, Orange,
and Ventura. A similar shock to the incomes of Latinos serves to elevate their area-wide
homeownership rates to 47%, whereas little homeownership change derives to Asian households
via such an income shock, given their already high levels of economic endowment. Other
simulated effects of changes in neighborhood characteristics, including shocks to house prices,
rents, amenities, and minority population representation, are evidenced with respect to their
impacts on residential location and homeownership choice. For example, a simulated increase in
minority population shares in the Inland Empire serves to perceptibly enhance the dispersion of
black and Latino populations (particularly renters) to suburban areas, but provides less immediate
support as regards the minority homeownership goal.
