• Previous tenure choice studies have ignored the possible impact of job access on the tenure choice opportunity set. As a result, those studies appear to understate racial differences in the influence of family income.
• This paper estimates a nested multinomial logit of residential location and tenure choice. Our tenure choice analysis includes the attributes of a family’s residential location. The inclusion of residential location information increases the racial difference in the effect of family income, but reduces the racial difference in the effect of the constraint variable.
• The influences of both credit constraints and family income on homeownership vary by race. The availability of liquid assets for a downpayment appears to be more important for African-Americans than whites, but total family income appears to be less important for African-Americans.
• Moreover, this paper suggests some alternative explanations for the existence of these racial differences. Access to mass transit appears to be more important to renters than owners, and this effect appears to be larger for minorities.
• Overall, the results suggest that homeownership programs and new construction/rehabilitation programs have a more positive impact on property values.
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