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Hispanic Homeownership Seminar

Hispanic Homeownership Seminar. U.S. Department of Housing and Urban Development Thursday, June 1, 2006. Housing Tenure Expenditure and Satisfaction across Hispanic, African-American, and White Households: Evidence from the American Housing Survey Thomas P. Boehm and Alan M. Schlottmann.

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Hispanic Homeownership Seminar

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  1. Hispanic Homeownership Seminar U.S. Department of Housing and Urban Development Thursday, June 1, 2006

  2. Housing Tenure Expenditure and Satisfaction across Hispanic, African-American, and White Households: Evidence from the American Housing Survey Thomas P. Boehm and Alan M. Schlottmann Hispanic Homeownership Seminar - June 1, 2006

  3. Two Primary Components to the Analysis of the Differences in Housing Circumstances across Racial/Ethnic Groups • Housing Tenure and Housing Expenditure • Quality of Structural and Neighborhood Environment Hispanic Homeownership Seminar - June 1, 2006

  4. The Data Pooled recent AHS MSA samples: • 41 MSAs – sampling years 1998, 2002, and 2004 • Approximately 5,000 households in each MSA Why the MSA Samples? • 17,968 Hispanic Households in the combined sample • Identify the housing markets in which housing decisions are being made Hispanic Homeownership Seminar - June 1, 2006

  5. I. Housing Tenure and Expenditure Two Sub-samples Considered in the Analysis • All Households • Recent Movers Stratification of the Samples • High versus Low Income • Non-White versus White Hispanics • Recent Immigrant Status Hispanic Homeownership Seminar - June 1, 2006

  6. The Results Analysis of Means • Ownership Is Substantially More Likely for Whites Low-income Hispanics and African-Americans ownership rates for the full sample are 38.0 % and 36.5 % respectively versus 60.8 % for whites. Hispanic Homeownership Seminar - June 1, 2006

  7. House Value and Rental Cost Substantially Higher for White Households Low Income Households – Full Sample Mean House Value: Whites - $147,289 African Americans - $95,055 Hispanics - $128,681 Mean Rent Payment: Whites - $606 African Americans - $496 Hispanics - $592 Hispanic Homeownership Seminar - June 1, 2006

  8. Differences for Hispanic Households 1. Hispanic homeowners experience higher total amounts of debt: For example, the full sample debt levels for low income houses: White households – $35,509Black households – $35,164Hispanic households – $45,971 Hispanic Homeownership Seminar - June 1, 2006

  9. Differences for Hispanic Households 2.  Hispanic Households are more crowded than other groups For example, for the full sample for lower income families: Owners – Hispanics average 681 square feet per person, while African-Americans and whites average 1,062 and 1,130 square feet per person respectably. Renters – Hispanics average 391 square feet per person, African-Americans 574, whites 640. Hispanic Homeownership Seminar - June 1, 2006

  10. Regression Analysis • Likelihood of Homeownership – Is the likelihood of homeownership lower for different racial/ethnic groups when controlling for other factors that might influence the likelihood that they would be able to purchase a home? • Control factors – The housing market (41 MSAs), the marital status and sex of household head, age of the household head, the family size, the income of the family and a categorical variable identifying families that have substantial savings ($25,000 or more). Hispanic Homeownership Seminar - June 1, 2006

  11. Both minority groups have a substantially lower likelihood of ownership • For the full sample, for low income families African-Americans 40.5 % less likely to own White-Hispanics 28.5 % less likely to own Non-White Hispanics 39.2 % less likely to own • For the recent movers, for low income families: African-Americans 52.3 % less likely to own White Hispanics 38.2 % less likely to own Non-White Hispanics 23.0 % less likely to own Hispanic Homeownership Seminar - June 1, 2006

  12. Differential Levels of House Value for Homeowners Controlling for other factors as before (i.e., income, education, the housing market, etc.) • For the full sample for low-income owners: African-Americans $20,113 lower house value White-Hispanics $19,768 lower house value Non-White Hispanics $28,845 lower house value • For the recent mover sample for low-income owners: African-Americans $35,077 lower house value White-Hispanics $23,715 lower house value Non-White Hispanics $45,019 lower house value Hispanic Homeownership Seminar - June 1, 2006

  13. Differential Annual Rent Payment for Renters • For the Full Sample of low-income renters: African-American Families $712 lower rent levels White-Hispanic Families $764 lower rent levels Non-white Hispanic Families $871 lower rent levels • For the Recent-mover sample of low-income renters: African-American Families $742 lower rent levels White-Hispanic Families $844 lower rent levels Non-white Hispanic Families $946 lower rent levels Hispanic Homeownership Seminar - June 1, 2006

  14. The Impact of “Time in the U.S.” on Homeownership, and House Value and Rent Levels • Available only for 2002 and 2004 • Categorical representation of “time in the U.S.” • 5 years or less • 5 through 12 years • 13 through 22 years • 23 years or more Hispanic Homeownership Seminar - June 1, 2006

  15. Results for Recent Immigrants • Households in the U.S. for less than 5 years and 5-12 years are significantly less likely to buy a home than households whose head was born in this country holding other factors constant. • In contrast, for the recent mover sample these recent immigrant groups do not have a substantially lower likelihood of being owners • For both groups, renters have a significantly lower, rental expenditure but there is no impact of recent immigrant status on the value of house owned by either low or high income households. Hispanic Homeownership Seminar - June 1, 2006

  16. II. Satisfaction with Structural and Neighborhood Characteristics AHS – 10 point scale ranking structural and neighborhood dimension of housing units. Mean Ranking • The primary determinant of these rankings is tenure – owners rank both neighborhood and structural characteristics higher than renters Hispanic Homeownership Seminar - June 1, 2006

  17. Low-Income – Full Sample Owners Structural Rank Neighborhood Rank White 8.44 8.14 Black 8.31 7.71 Hispanic 8.36 8.02 Renters Structural Rank Neighborhood Rank White 7.46 7.55 Black 7.41 7.33 Hispanic 7.49 7.54 Hispanic Homeownership Seminar - June 1, 2006

  18. Analysis of Individual Structural and Neighborhood Characteristics • Ordinal Probit Model • Equations Stratified by Tenure, Race/Ethnic Group, and Income Hispanic Homeownership Seminar - June 1, 2006

  19. Results for Structural Quality All households react in a very similar manner to structural characteristics. • Factors lowering Structural Quality: External leaks, internal leaks, vermin problems, major structural problems, and interior deterioration, etc. • Factors increasing Structural Quality: Being on a public sewer system, plumbing and toilets being in satisfactory working order, having a central heating system, etc. Hispanic Homeownership Seminar - June 1, 2006

  20. Results for Structural Quality Not all groups have identical characteristics circumstances • For the full sample, minorities do have a higher proportion with one or more significant structural problem. Low-Income Owned Units – Full Sample Hispanics 43.2% with major structural problems African-Americans 54.4% with major structural problems Whites 23.0% with major structural problems Hispanic Homeownership Seminar - June 1, 2006

  21. Water quality issues are worse for Hispanic households than African American or white households Low-Income Homeowners Hispanic 24.3% water quality a problem African-American 13.4% water quality a problem White 8.5% water quality a problem Hispanic Homeownership Seminar - June 1, 2006

  22. Heating system quality is generally worse for Hispanic households than African-Americans or White households Low-Income Homeowners Hispanic 10.7% water quality a problem African-American 6.3% water quality a problem White 2.8% water quality a problem Hispanic Homeownership Seminar - June 1, 2006

  23. Low-income Hispanic households face more crowding than do their African-American or white counterparts. Low-Income Homeowners Hispanic 2.5 rooms per person African-American 3.5 rooms per person White 3.8 rooms per person Hispanic Homeownership Seminar - June 1, 2006

  24. Deterioration of Interior facilities (i.e., cracks, holes in the walls or ceiling, holes in the floor, broken plaster or peeling paint) Low-Income Homeowners Hispanic 9.2% African-American 11.8% White 6.0% Hispanic Homeownership Seminar - June 1, 2006

  25. Results for Neighborhood Quality All households react in a similar manner to factors effecting neighborhood quality • Factors Making a Neighborhood Undesirable: crime problems, litter problems, noise problems, junk and abandoned buildings, etc. • Factors Making a Neighborhood Desirable: Green space, newer buildings, etc. Hispanic Homeownership Seminar - June 1, 2006

  26. Results for Neighborhood Quality Not all groups have identical characteristics circumstances • Crime problems and inadequate police protection are more likely to be perceived by African-Americans and White Households. Low-Income Renters Hispanic 8.9% Police Protection Inadequate African-American 15.9% Police Protection Inadequate White 6.1% Police Protection Inadequate Hispanic Homeownership Seminar - June 1, 2006

  27. Green space is less likely to be near minority owned homes. Low-Income Owners Hispanic 23.79% Green Space Nearby African-American 27.18% Green Space Nearby White 35.67% Green Space Nearby Hispanic Homeownership Seminar - June 1, 2006

  28. African-Americans owners and renters are more likely to have abandoned buildings nearby. Low-Income Renters Hispanic 8.9% Abandoned Buildings a problem African-American 15.9% Abandoned Buildings a problem White 6.1% Abandoned Buildings a problem Hispanic Homeownership Seminar - June 1, 2006

  29. Minority renters are more likely to be located in areas in which road repairs are a concern. Low-Income Renters Hispanic 43.4% Road repairs a problem African-American 50.3% Road repairs a problem White 38.0% Road repairs a problem Hispanic Homeownership Seminar - June 1, 2006

  30. Summary • First time the housing circumstances of a large national sample of Hispanics compared to African-Americans and Whites. • A primary determinant of structural and neighborhood satisfaction is homeownership. Clearly, Hispanics and African-Americans are still at a disadvantage. • The lower value of rented and owned units for African-American households in the sample suggests that they might be considered generally worse off than Hispanics with regard to housing • Regardless of Racial/Ethnic background the same specific neighborhood and structural factors influence housing satisfaction, but characteristics of the housing in which they live can be quite different even within a particular income group and tenure type. Hispanic Homeownership Seminar - June 1, 2006

  31. Summary • Recent Immigrant Status can have a significant on housing choice influence. • Some unique aspects of the Hispanic housing situation were observed a. White and Non-White Hispanics often appeared to have significantly worse outcomes, even when other factors were controlled for b. Hispanic households appear generally more crowded c. Hispanic households appear to have relatively high home mortgage debt levels d. Hispanic households are more likely to experience problems with water quality and live in units with lower quality heating sources Hispanic Homeownership Seminar - June 1, 2006

  32. Homeownership Rate Differences Between Hispanics and Non-Hispanic Whites: Regional Variation at the County Level George S. Masnick Hispanic Homeownership Seminar - June 1, 2006

  33. Research Goals • Better understand the magnitude of homeownership rate gaps between Hispanics and non-Hispanic whites. • Better understand the relationships between homeownership rate gaps and selected explanatory variables. • Identify counties that are regional outliers, where homeownership rate gaps are large by regional standards but where explanatory differences are weak. • Such counties could be targets of future efforts to improve homeownership opportunities for young Hispanic families. Hispanic Homeownership Seminar - June 1, 2006

  34. Background Facts • Hispanics are geographically concentrated. • Hispanic household heads are younger. • Non-Hispanic white/ Hispanic home ownership rate gaps are smallest for younger householders. • West and South have smaller home ownership rate gaps than Midwest and Northeast Hispanic Homeownership Seminar - June 1, 2006

  35. Methodology • Select the 25 counties in each census region that have the highest numerical Hispanic representation. • Focus on young adults 25-34. • Maintain a regional focus. • Data source is 2000 census summary files • Rely on graphic representation to understand Hispanic/ non-Hispanic white differences (Chart Type #1). Hispanic Homeownership Seminar - June 1, 2006

  36. Chart Type #1 - West • Diagonal represents equality • Short dark line represents trend • Separation between lines represents departure from equality • Points above trend line represent outliers Non-Hispanic White Ho Rate Hispanic Homeownership Seminar - June 1, 2006

  37. Chart Type #1 - South • Diagonal represents equality • Short dark line represents trend • Separation between lines represents departure from equality • Points above trend line represent outliers Non-Hispanic White Ho Rate Hispanic Homeownership Seminar - June 1, 2006

  38. Chart Type #1 - Midwest • Diagonal represents equality • Short dark line represents trend • Separation between lines represents departure from equality • Points above trend line represent outliers Non-Hispanic White Ho Rate Hispanic Homeownership Seminar - June 1, 2006

  39. Chart Type #1 - Northeast • Diagonal represents equality • Short dark line represents trend • Separation between lines represents departure from equality • Points above trend line represent outliers Non-Hispanic White Ho Rate Hispanic Homeownership Seminar - June 1, 2006

  40. Explanatory Variables • Median Income and % Age 25-34 Earning $40K+ • Median Housing Value • Hispanic Housing Costs as a % of Household Income • Share Owner Units Built Since 1980 • Share Owner Units Single Family Detached • Share of Hispanic Foreign Born Not a Citizen • Share Age 15-64 Married with Kids <18 Hispanic Homeownership Seminar - June 1, 2006

  41. Explanatory Variables • Median Income and % Age 25-34 Earning $40K+ • Median Housing Value • Housing Costs as a % of Household Income • Share Owner Units Built Since 1980 • Share Owner Units Single Family Detached • Share of Hispanic Foreign Born Not a Citizen • Share Age 15-64 Married with Kids <18 Hispanic Homeownership Seminar - June 1, 2006

  42. Median Housing Value - West • Diagonal represents equality • Short dark line represents trend • Separation between lines represents departure from equality • Points above trend line represent outliers Non-Hispanic White Owners Hispanic Homeownership Seminar - June 1, 2006

  43. Median Housing Value - South • Diagonal represents equality • Short dark line represents trend • Separation between lines represents departure from equality • Points above trend line represent outliers Non-Hispanic White Owners Hispanic Homeownership Seminar - June 1, 2006

  44. Median Housing Value - Midwest • Diagonal represents equality • Short dark line represents trend • Separation between lines represents departure from equality • Points above trend line represent outliers Non-Hispanic White Owners Hispanic Homeownership Seminar - June 1, 2006

  45. Median Housing Value - Northeast • Diagonal represents equality • Short dark line represents trend • Separation between lines represents departure from equality • Points above trend line represent outliers Non-Hispanic White Owners Hispanic Homeownership Seminar - June 1, 2006

  46. Explanatory Variables • Median Income and % Age 25-34 Earning $40K+ • Median Housing Value • Housing Costs as a % of Household Income • Share Owner Units Built Since 1980 • Share Owner Units Single Family Detached • Share of Hispanic Foreign Born Not a Citizen • Share Age 15-64 Married with Kids <18 Hispanic Homeownership Seminar - June 1, 2006

  47. Median Cost Burden - West • Diagonal represents equality • Short dark line represents trend • Separation between lines represents departure from equality • Points above trend line represent outliers Non-Hispanic White Owners Hispanic Homeownership Seminar - June 1, 2006

  48. Median Cost Burden - South • Diagonal represents equality • Short dark line represents trend • Separation between lines represents departure from equality • Points above trend line represent outliers Non-Hispanic White Owners Hispanic Homeownership Seminar - June 1, 2006

  49. Median Cost Burden - Midwest • Diagonal represents equality • Short dark line represents trend • Separation between lines represents departure from equality • Points above trend line represent outliers Non-Hispanic White Owners Hispanic Homeownership Seminar - June 1, 2006

  50. Median Cost Burden - Northeast • Diagonal represents equality • Short dark line represents trend • Separation between lines represents departure from equality • Points above trend line represent outliers Non-Hispanic White Owners Hispanic Homeownership Seminar - June 1, 2006

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