Estimating and decomposing changes in the White–Black homeownership gap from 2005 to 2011

This study evaluates the effects of the recent US housing bust on the White–Black homeownership gap by estimating and decomposing the changes in the distribution of the gap between 2005 and 2011. Our analysis shows that the housing bust did not affect the homeownership gap uniformly. In fact, we find that the gap decreased for households that were the least likely to own and remained unchanged for households that were the most likely to own, and that Black households with around a 50% probability of homeownership were especially vulnerable to the crisis. We also find that the contribution of the residual gap was modest. Changes in the White–Black homeownership gap over the sample period are mainly attributed to changes in household income, whether the household earned dividend, interest or rental income, and marital status, with the extent of their respective influences varying over the homeownership distribution. Our empirical approach reveals distributional information on the determinants of the changes in the homeownership gap at the household level. Such insights have valuable policy implications that would otherwise be concealed in analyses that look only at the conditional mean.