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Management Analysis

Housing Gap

Why this is important
Housing is more than shelter.  Homeownership has historically been seen as an indicator of financial security and overall stability in a community, with homeowners less cost-burdened than renters (see the Cost-burdened Households measure).  However, people who are white are more likely to own their own homes than are people of color.  The difference in homeownership rates between white and non-white households is known as the homeownership gap1.  There are many reasons for homeownership gap to occur, including income disparities, access to credit, racism in lending, and other practices.  It is important to ensure that persons of all races in Dakota County have equal opportunities for home ownership and to establish good credit that will allow them to successfully own and manage a home.

What the data show
According to the U.S. Census Bureau’s American Community Survey, Dakota County’s homeownership rate in 2013 (an average for all homeowners of all races) was 73%, slightly higher than the statewide rate of 72%.  These figures compare favorably with the national rate of 64%.  However, the homeownership rate varies greatly between white and non-white residents in the County.

Housing GapThe chart shows a homeownership gap in Dakota County between 2005 and 2013. The white (non-Hispanic) homeownership rate declines slightly between 2005 (83%) and 2013 (78%), and the homeownership rate of people of color fluctuates greatly over the same period. The homeownership gap in Dakota County depends heavily on the number of people of color owning a home.  The homeownership rate for people of color increased from 52% in 2005 to 65% in 2008, but declined to 44% in 2013. The highest homeownership rate of people of color in 2008 corresponds to the lowest homeownership gap. The declining homeownership rate of people of color after 2008 means the homeownership gap is widening.

The widening gap (starting in 2009) can be explained by the recent housing crisis, which affected all communities and was particularly hard on people of color.  As a result, the homeownership rate for households of color dropped faster than that of white households.  Given that white households’ income is higher than that of households of color, and unemployment remains higher for people of color compared to people who are white, it will take longer for the households of color to recover from the recent housing crisis.

Housing GapThis chart compares the homeowership gap in Dakota County with that of Minnesota. It seems that the recent housing crisis affected the homeownership gap in Dakota County more than in Minnesota as a whole. The homeownership gap in Dakota County has been lower than in Minnesota overall, but in recent years is approaching that of Minnesota.

1 The housing gap measure is calculated as a percentage based on the ownership rate for white (non-Hispanic) households minus the rate for households that identify as American Indian, Asian, black, some other race, multi-racial or Hispanic.

Last updated: 4/3/2015 6:02 AM