Racial and Ethnic Inequality in Home Value and Homeownership Dynamics

Ryan Finnigan, Duke University

Americans have long viewed homeownership as a symbol of the “American Dream,” and a defining feature of socioeconomic success. The homeownership rate has risen substantially over the past several decades. However, this increase has accompanied rising inequality in the housing market. Average home values have increased steadily, as has the spread of home values. This paper analyzes the dynamic relationship between rising local median home values and racial/ethnic gaps in homeownership using decennial census data from 1970 to 2000, and the 2009 American Community Survey. Contrary to past studies, I find a positive association between rising home values and homeownership for white households. However, there is a negative relationship for black households, and no difference for Latino households. These results indicate that increasing inequality in housing prices has been a significant contributor to increasing racial and ethnic gaps in homeownership over the last four decades.