Urban Wire Evidence Shows Military Service Reduces the Racial Homeownership Gap
Sarah Strochak, Jung Hyun Choi, Laurie Goodman
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Since the Great Recession, the difference between the Black and white homeownership rates in the United States has increased to its highest level in 50 years, from 28.1 percentage points in 2010 to 30.1 percentage points in 2017.

In our research to understand and close this gap, we were intrigued to find that many of the cities that have narrowed the racial homeownership gap are near large military bases that serve as substantial employers in their city.

In a recent report, we sought to closely examine this finding. We established that military service and the presence of a military institution both act as equalizers, reducing the gaps in rates between white and Hispanic homeownership and white and black homeownership.

Military service is linked to higher rates of homeownership

For veterans, the gap decreases from 30 to 19 percentage points for black households and from 25 to 15 percentage points for Hispanic households. For active-duty military, the gap falls from 30 to 12 percentage points for black households and from 25 to 13 percentage points for Hispanic households.

Veterans have a higher homeownership rate than the general population, at 78.2 percent, compared with 64.0 percent for those who have not served in the military. However, the veteran population is also older, has higher incomes, and has a higher share of white people than the population that has not served in the military, and these characteristics are associated with higher homeownership rates.

When we look at the homeownership rate by race and ethnicity, we find these differences between veterans and the total population are much larger for black and Hispanic households than for white households. In other words, military service for Hispanic and black households increases the likelihood of homeownership and higher income.

When we tested this relationship with a regression analysis, we found that, controlling for a suite of other factors, military status is associated with smaller gaps in homeownership and income between racial and ethnic groups. Although white veterans are slightly less likely to be homeowners than their nonmilitary counterparts, the opposite is true for black, Hispanic, and Asian households.

If all else is held constant, the homeownership rate for black veteran households is 8.3 percent higher than nonmilitary households, showing how military service has a huge effect on shrinking the homeownership gap. Our results show the homeownership gap between white and Black nonmilitary households is 22.4 percent, compared with a 13.1 percent gap between veteran households and 7.0 percent gap for active-duty military households.

Proximity to a large military base is also linked to higher homeownership rates

Our research also finds that residents living in areas with a large military base have higher homeownership rates, after controlling for a variety of factors, and that the presence of a large military base reduces racial and ethnic homeownership rate disparities.

The presence of a large military base may increase local knowledge of US Department of Veterans Affairs (VA) loans and serve as a stable employment anchor for the area as well. Spitzer and Lambie-Hanson find that counties near a major military site have a higher rate of VA mortgage lending.

The presence of a large military base boosts the homeownership rates of black and Hispanic households but not that of white households. Black households living in areas with a base are 2.7 percentage points more likely to own a home compared with black households living in areas without a base, and Hispanic households are 5.2 percentage points more likely to become homeowners.

White households living near a military base are actually slightly less likely to be homeowners than white households not living near a base. Although the effects of a large military base’s presence on homeownership are smaller than the effect of military status itself, our results show that the presence of a large military base further contributes to narrowing the differences in homeownership disparities across racial and ethnic groups.

More research can illuminate the “equalizing” role of the military

Although we find military service and the presence of a large military base contribute to reducing the racial homeownership gap, further exploration is needed to identify the mechanisms underlying our results.

Existing studies have not yet explained why serving in the military or living near a military base have a positive effect on Black and Hispanic homeownership rates. Is it the widespread availability of jobs with a stable income or better access to information about low–down payment VA mortgages that make the difference? Understanding the mechanisms will yield important insight for employers and policymakers.

Better understanding the benefits the military brings to local economies may also offer insights for other types of anchor institutions—such as universities, large hospitals, and other large employers—about policies and programs that boost the financial health of employees to help them better acquire and retain top talent.

Although most employers do not have their own lending programs, offering programs such as employer-assisted down payment assistance or on-site homebuyer education could partially emulate the effects we see through VA loans.


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The Urban Institute podcast, Evidence in Action, inspires changemakers to lead with evidence and act with equity. Cohosted by Urban President Sarah Rosen Wartell and Executive Vice President Kimberlyn Leary, every episode features in-depth discussions with experts and leaders on topics ranging from how to advance equity, to designing innovative solutions that achieve community impact, to what it means to practice evidence-based leadership.


Research Areas Housing finance
Tags Racial and ethnic disparities Homeownership Racial homeownership gap
Policy Centers Housing Finance Policy Center