Paul E. Carillo (George Washington University) and Rujia Li (George Washington University)
Abstract: The racial homeownership gap, defined as the disparity in homeownership rates between white and minority households, exhibits substantial spatial variation, even within urban areas. Using a semi-parametric sample re-weighting approach to jointly model location and tenure choices, we decompose this gap into two components: one attributable to differences in demographic characteristics, such as education and income, and another that remains unexplained. Our findings indicate that while demographic differences account for approximately half of the variation in homeownership dispari-
ties across areas, the unexplained portion varies significantly by location. Notably, this residual gap is highly correlated with local racial composition—areas with higher proportions of Black and Hispanic residents tend to exhibit narrower racial homeownership gaps.
Keywords: Decomposition, Spatial Econometrics