Does home equity explain the black wealth gap?

Prior literature has shown that blacks have lower rates of homeownership, lower amounts of home equity, and experience lower housing appreciation than whites. This paper examines racial differences in the returns to homeownership using a longitudinal survey of middle-aged homeowners. We find that home equity appreciation is much lower for blacks between 1994 and 2004, however blacks with high incomes do not experience the same home equity gap. While there are regional differences in negative racial effects, high income blacks are able to avoid those as well. We find that among those who acquire the largest increase in home equity, being black is not detrimental. We also find that even when we account for differences in home equity growth, racial differences in wealth growth persist.