Role of Credit Attributes in Explaining Homeownership Gap in the Post-Crisis Period, 2012 – 2018
*Names in bold indicate Presenter
We first investigate the big constraints faced by consumers transitioning into mortgage ownership in the recovery period: credit attributes, income, debt, house prices, or demand for homeownership? Using a logistic regression framework, we find that while age, marital status and homeownership demand are big drivers of transition rate, other factors such as student loan debt, gender, and education level play less important roles. Consumers with missing credit scores or insufficient credit histories are less likely to transition. Second, recognizing differences in the experiences of black and Hispanic consumers, we quantify contribution of racial differences in individual characteristics to racial gap in transition rates for each minority group separately. Using Blinder-Oaxaca decomposition technique for a nonlinear equation, we find that racial differences in credit attributes explain a large part of the racial gap in the transition rates for both minority groups. However, while racial differences in geographic location contribute substantially to white-Hispanic gap in transition rate, racial differences in household composition matters more in explaining the white-black gap in transition rate.
- mortgage_transition_jd_072019.pdf (574.7KB)