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The Impact of Real Estate Market Knowledge on Tenure Choice: A Comparison of Black and White Households
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Published Winter 2006
Author Donald R. Haurin, Hazel A. Morrow-Jones
Source Fannie Mae Foundation
URL Click here to download the full document
PDF: 30 pages, 114 kbytes


The Bottom Line

The results indicate that there are racial differences in real estate knowledge. Programs that convey more information to minorities should help close the racial homeownership gap.  There is a need for homeownership counseling and for evaluation of these programs' effectiveness.  

The Study and Findings

Using survey data from 1,000 households in the Columbus, Ohio, metropolitan area, including equal-sized samples from the white and black populations of renters and owners, this study measures households' real estate market knowledge to determine if there are racial differences in the level of real estate knowledge possessed by households and whether this knowledge affects homeownership.

The study finds that more black renters cited lack of real estate market knowledge as a barrier to homeownership.  The results also find that the greater the amount of real estate market knowledge, the greater the likelihood that a household is a homeowner.

Commenting on the study, Reynolds Farley argues that the study neglects to mention the largest black-white discrepancy in the housing market - that blacks and whites generally live in different neighborhoods.  He argues that public policy should consider more broad goals than just closing the racial homeownership gap - namely, allowing anyone, regardless of race, to have access to quality housing in quality neighborhoods using appropriate mortgage products that allow households to maintain their housing over the long term.

In their comment, Marsha J. Courchane and Peter M. Zorn agree that improved financial literacy may well be an important tool for reducing the homeownership gap, but cautioned that it might not necessarily have as large an impact as suggested by the study.  In comparing the findings to other existing research they find that the reasons for the gap are complex.

This study would be of interest to federal housing policymakers, housing counseling agencies, and financial literacy educators and advocates.

What's New

Existing studies on factors explaining which households become homeowners and which rent do not provide a complete explanation when considering the black-white gap in homeownership rates.  This study adds to the research by examining the impact of real estate and financial literacy knowledge on tenure choice.


The survey focuses on one metropolitan statistical area and only on whites and blacks.

This document is in the public domain and may be freely copied, distributed or publicly displayed.

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