Racial Differences in Intergenerational Wealth Transfers and Access to Homeownership

Suzanne Withers, University of Washington
Carolina Reid

This paper examines the extent to which intergenerational wealth transfers, in the form of gifts or inheritance, enable households to enter home ownership. Home ownership is an ideal many families aim to achieve. It remains deeply entrenched within the national conception of success and social mobility and is a primary form of capital accumulation for many American families. However, households who are unable to obtain home ownership are not privy to the associated wealth. Using the PSID, we examine transitions from rental accommodation to homeownership and assess the extent to which intergenerational wealth transfers facilitate these transitions. We find that for first-time homebuyers, access to money transfers over $5,000 significantly increase the likelihood of being able to buy a home, and that these effects are stronger for minority households than for white households. Our findings indicate complex ways intergenerational wealth transfers reinforce long term social cleavages in American society.