Restricted accessResearch articleFirst published online 2010-11
Misleading Comparisons of Homeownership Rates when the Variable Effect of Household Formation Is Ignored: Explaining Rising Homeownership and the Homeownership Gap between Blacks and Asians in the US
Despite ominous signs of housing market stress in the US, the homeownership rate reached an all-time high in 2006. The conventional definition of homeownership, which is based on the share of households and ignores the effects of variable household formation, confounds the measurement of ‘success’ in achieving homeownership. It is found that, from 1990 to 2006, declining household formation led to an elevated homeownership rate in the US and that this effect varies substantially between racial/ethnic groups. Asians, who achieve high homeownership rates, have the lowest propensity to form independent households, in sharp contrast to African Americans. Asians do not have better access per capita to owner-occupied housing than do Blacks. The conventional measure of homeownership is an incomplete measure of homeownership opportunity because it fails to account for variable household formation. The changing population mix in the US includes groups with different propensities for household formation, thus confusing future assessments of homeownership and the housing market.
Get full access to this article
View all access options for this article.
References
1.
Bianchi, S.M., Farley, R. and Spain, D. ( 1982) Racial inequality in housing: an examination of recent trends, Demography, 19, pp. 37-51.
2.
Blinder, A.S. ( 1973) Wage discrimination: reduced form and structural estimates , Journal of Human Resources, 8, pp. 436-455.
3.
Borsch-Supan, A. ( 1986) Household formation, housing prices, and public policy impacts, Journal of Public Economics, 30, pp. 145-164.
4.
Bostic, R.W. and Surette, B.J. ( 2001) Have the doors opened wider? Trends in homeownership rates by race and income, Journal of Real Estate Finance and Economics , 23, pp. 411-434.
5.
Burch, T.K. and Matthews, B.J. ( 1987) Household formation in developed societies, Population and Development Review, 13, pp. 495-511.
6.
The Bush Administration (2004a) President Bush’s policies support America’s small businesses. The White House, Washington, DC.
7.
The Bush Administration (2004b) President George W. Bush: a remarkable record of achievement. The White House, Washington, DC.
8.
Carliner, G. ( 1975) Determinants of household headship, Journal of Marriage and the Family, 37, pp. 28-38.
9.
Chevan, A. ( 1989) The growth of home ownership: 1940-1980, Demography, 26, pp. 249-266.
10.
Clark, W.A.V. and Mulder, C.H. ( 2000) Leaving home and entering the housing market, Environment and Planning A, 32, pp. 1657-1672.
11.
Eggers, F.J. ( 2001) Homeownership: a housing success story, Cityscape, 5, pp. 43-56.
12.
Ermisch, J.F. ( 1991) An ageing population, household formation and housing , Housing Studies, 6, pp. 230-239.
13.
Ermisch, J.F. ( 1999) Prices, parents, and young people’s household formation , Journal of Urban Economics, 45, pp. 47-71.
14.
Flippen, C.A. ( 2001) Racial and ethnic inequality in homeownership and housing equity, Sociological Quarterly, 42, pp. 121-149.
15.
Freeman, L. ( 2005) Black homeownership: the role of temporal changes and residential segregation at the end of the 20th century, Social Science Quarterly, 86, pp. 403-426.
16.
Gabriel, S.A. ( 2001) Opening the doors to homeownership: challenges to federal policy, Cityscape, 5, pp. 31-45.
17.
Gabriel, S.A. and Rosenthal, S.S. ( 2002) The causes of increase in homeownership in the 1990s. Research Institute for Housing America, Washington, DC.
18.
Green, R.K. ( 1996) Should the stagnant homeownership rate be a source of concern?, Regional Science and Urban Economics, 26, pp. 337-368.
19.
Gyourko, J. and Linneman, P. ( 1996) Analysis of the changing influences on traditional households’ ownership patterns, Journal of Urban Economics, 39, pp. 318-341.
20.
Haurin, D.R. and Rosenthal, S.S. ( 2007) The influence of household formation on homeownership rates across time and race, Real Estate Economics, 35(4), pp. 411-450.
21.
Haurin, D.R., Hendershott, P.H. and Kim, D. ( 1994) Housing decisions ofAmerican youth, Journal of Urban Economics, 35, pp. 28-45.
22.
Haurin, D.R., Hendershott, P.H. and Wachter, S.M. ( 1997) Borrowing constraints and the tenure choice of young households , Journal of Housing Research, 8, pp. 137-154.
23.
Haurin, R.J., Haurin, D., Hendershott, P. and Bourassa, S. ( 1997) Home or alone: the costs of independent living for youth , Social Science Research, 26, pp. 135-152.
24.
Hendershott, P.H. ( 1988) Household formation and homeownership: impacts of demographic, sociological, and economic factors, Housing Finance Review , 7, pp. 201-224.
25.
Hook, J. van and Glick, J.E. ( 2007) Immigration and living arrangements: moving beyond economic need versus acculturation, Demography, 44, pp. 225-249.
26.
Horton, H.D. ( 1992) Race and wealth: a demographic analysis of black homeownership , Sociological Inquiry, 62, pp. 480-489.
27.
Hughes, M.E. ( 2003) Home economics: metropolitan labor and housing markets and domestic arrangements in young adulthood, Social Forces , 81, pp. 1399-1429.
28.
Kendig, H.L. ( 1990) A life course perspective on housing attainment, in: D. Myers (Ed.) Housing Demography: Linking Demographic Structure and Housing Markets, pp. 133-156. Madison, WI: University of Wisconsin Press.
29.
Kent, R.J. ( 1992) Household formation by the young in the United States , Applied Economics, 24, pp. 1129-1137.
30.
Krivo, L.J. and Kaufman, R.L. ( 2004) Housing and wealth inequality: race/ethnic differences in home equity in the United States, Demography, 41, pp. 585-605.
31.
Leppel, K. ( 1986) A trinomial logit analysis of household composition, AREUEA Journal, 14, pp. 537-556.
32.
Leppel, K. ( 1991) Demographic effects on household formation patterns, Journal of Real Estate Research, 6, pp. 191-206.
33.
Long, J.S. and Freese, J. ( 2006) Regression Models for Categorical Dependent Variables Using Stata. College Station, TX: Statacorp LP.
34.
Manski, C.F. ( 1989) Anatomy of the selection problem, Journal of Human Resources52, pp. 343-360.
35.
Masnick, G.S., McArdle, N. and Belsky, E.S. (1999) A critical look at rising homeownership rates in the United States since 1994. Joint Center for Housing Studies, Harvard University, Cambridge, MA.
36.
Miron, J.R. (1988) Housing in Postwar Canada: Demographic Change, Household Formation, and Housing Demand. Kingston, ON: McGill-Queen’s University Press.
37.
Myers, D. (1992) Analysis with Local Census Data: Portraits of Change. Boston, MA: Academic Press.
38.
Myers, D. ( 2001) Advances in homeownership across the states and generations: continued gains for the elderly and stagnation among the young. Census Notes No. 08, Fannie Mae Foundation.
39.
Myers, D. ( 2004) Cohorts and socioeconomic progress. Russell Sage Foundation, New York City, andPopulation Reference Bureau, Washington, DC.
40.
Myers, D. and Lee, S.W. ( 1998) Immigrant trajectories into homeownership: a temporal analysis of residential assimilation, International Migration Review, 32, pp. 593-625.
41.
Myers, D. and Park, J. ( 1999) The role of occupational achievement in homeownership attainment by immigrants and native borns in five metropolitan areas, Journal of Housing Research, 10, pp. 61-93.
42.
Myers, D., Baer, W.C. and Choi, S.-Y. ( 1996) The changing problem of overcrowded housing, Journal of the American Planning Association, 62, pp. 66-84.
43.
Myers, D., Megbolugbe, I. and Lee, S.W. ( 1998) Cohort estimation of homeownership attainment among native-born and immigrant populations, Journal of Housing Research, 9, pp. 237-269.
44.
Myers, D., Peiser, R., Schwann, G. and Pitkin, J. ( 1992) Retreat from homeownership: a comparison of the generations and the states, Housing Policy Debate, 3, pp. 945-975.
45.
Myers, D., Painter, G., Yu, Z. et al. (2005) Regional disparities in homeownership trajectories: impacts of affordability, new construction, and immigration, Housing Policy Debate, 16, pp. 53-83.
46.
Newey, W.K. ( 1999) Consistency of two-step sample selection estimators despite misspecification of distribution, Economics Letters, 63, pp. 129-132.
47.
Oaxaca, R. ( 1973) Male-female wage differentials in urban labor market, International Economic Review, 14, pp. 693-709.
48.
Office of Federal Housing Enterprise Oversight ( 2007) House price index (HPI). Office of Federal Housing Enterprise Oversight, Washington, DC .
49.
Painter, G., Yang, L. and Yu, Z. ( 2003) Heterogeneity in Asian American homeownership: the impact of household endowments and immigrant status, Urban Studies , 40, pp. 505-530.
50.
Pitkin, J. ( 1990) Housing consumption of the elderly: a cohort economic model, in: D. Myers (Ed.) Housing Demography: Linking Demographic Structure and Housing Markets, pp. 174-199. Madison, WI: University of Wisconsin Press.
51.
Portes, A. and Hao, L. ( 2002) The price of uniformity: language, family and personality adjustment in the immigrant second generation, Ethnic and Racial Studies, 25, pp. 889-912.
52.
Riche, M.F. ( 2003) How changes in the nation’s age and household structure will reshape housing demand in the 21st century, in: J. Johnson and J. Cigna (Eds) Issue Papers on Demographic Trends Important to Housing, pp. 125-147. Office of Policy Development and Research, US Department of Housing and Urban Development .
53.
Rohe, W., Zandt, S. van and McCarthy, G. ( 2002) Home ownership and access to opportunity, Housing Studies, 17, pp. 51-61.
54.
Rosenbaum, E. and Friedman, S. ( 2007) The Housing Divide: How Generations of Immigrants Fare in New York’s Housing Market. New York: NYU Press.
55.
Rossi, P.H. and Weber, E. ( 1996) The social benefits of homeownership: empirical evidence from national surveys, Housing Policy Debate, 7, pp. 1-36.
56.
Ruggles, S., Sobek, M., Alexander, T. et al. (2003) Integrated public use microdata series: version 3.0. Historical Census Projects, University of Minnesota , Minneapolis, MN.
57.
Simmons, P.A. ( 2001) A coast-to-coast expansion: geographic patterns of U.S. homeownership gains during the 1990s. Census Notes No. 05, Fannie Mae Foundation.
58.
Skaburskis, A. ( 1994) Determinants of Canadian headship rates, Urban Studies, 31, pp. 1377-1390.
59.
Skaburskis, A. ( 1999) Modelling the choice of tenure and building type, Urban Studies, 36, pp. 2199-2215.
60.
Small, K.A. and Hsiao, C. ( 1985) Multinomial logit specification tests, International Economic Review, 26, pp. 619-627.
61.
Smith, L.B., Rosen, K.T., Markandya, A. and Ullmo, P.-A. ( 1984) The demand for housing, household headship rates, and household formation: an international analysis, Urban Studies , 21, pp. 407-414.
62.
Sweet, J.A. (1990) Changes in the life-cycle composition of the United States population and the demand for housing, in: D. Myers (Ed.) Housing Demography: Linking Demographic Structure and Housing Markets, pp. 35-61. Madison, WI: University of Wisconsin Press.
63.
US Census Bureau (2008) American housing survey for the United States: 2007 current housing reports, series H150/07. US Government Printing Office, Washington, DC.
64.
US Census Bureau (2009a) America’s families and living arrangements: HH-1. Households, by type: 1940 to present . Current Population Reports, Fertility and Family Statistics Branch, Housing and Household Economic Statistics Division, US Census Bureau, Washington, DC.
65.
US Census Bureau (2009b) America’s families and living arrangements. Fertility and Family Statistics Branch, Housing and Household Economic Statistics Division, US Census Bureau, Washington, DC.
66.
US Census Bureau (2009c) Housing vacancies and homeownership (CPS/HVS): historical homeownership rates for the U.S. and regions. Housing and Household Economic Statistics Division, US Census Bureau, Washington, DC.
67.
Wachter, S.M. and Megbolugbe, I. ( 1992) Racial and ethnic disparities in homeownership, Housing Policy Debate, 3, pp. 333-370.
68.
Woodward, J. and Damon, B. ( 2001) Housing characteristics: 2000. Census 2000 Brief, Economics and Statistics Administration, US Census Bureau, Washington, DC.
69.
Yu, Z. and Myers, D. ( 2007) Convergence or divergence in Los Angeles: three distinctive ethnic patterns of immigrant residential assimilation, Social Science Research, 36, pp. 254-285.
