Race, income, and liquid wealth: A two-stage analysis of sustainable homeownership
chunhui ren

This study conceptualizes homeownership as a special commodity, whose consumption involves a two-stage process: homeownership entry that initiates the consumption and homeownership retention that sustains the consumption. Based on this conceptual framework, we theorize different roles that income, liquid wealth, and race play between homeownership entry and retention. Using the Panel Study of Income Dynamics (PSID), three corresponding hypotheses are tested and verified: (1) income, a consumption qualifier, predicts first-time renters’ chance of transitioning into homeownership but has limited influence on homeownership retention; (2) Liquid wealth, an indicator for financial security, while offering only marginal help on homeownership entry, significantly reduces first-time homeowners’ risk of ownership termination; (3) while black renters face various invisible barriers to entering homeownership, black homeowners’ challenges in homeownership retention are relatively more tangible and can be more readily explained by observable racial differences. Policy implications of the findings are also discussed.