Journal of Urban Economics 58 (2005) 537–554 www.elsevier.com/locate/jue Racial gaps in the transition to first-time homeownership: The role of residential location Casey J. Dawkins ∗ Urban Affairs and Planning, Virginia Polytechnic Institute and State University, 301 Architecture Annex, Urban Affairs and Planning (0113), Virginia Tech, Blacksburg, VA 24061, USA Received 1 April 2005; revised 3 August 2005 Available online 16 September 2005 Abstract Evidence suggests that African Americans wait longer to transition into first-time homeownership than white households with similar endowments. This paper relies on data from the Panel Study of Income Dy- namics (PSID) to examine the contribution of residential location toward the black–white gap in first-time homeownership transitions. For a sample of young renters who first left their parents’ home during the pe- riod 1978 through 1987, I estimate continuous time duration models that explain racial gaps in rental tenure durations prior to first-time homeownership as a function of individual, household, and location-specific covariates. I find that while several residential location characteristics, particularly those associated with the supply of affordable owner-occupied housing, impinge upon racial gaps in first-time homeownership transitions, most of the racial gap in homeownership transitions would be eliminated if blacks and whites had similar individual and household characteristics.  2005 Elsevier Inc. All rights reserved. Keywords: Tenure transition; Duration model; Racial segregation; Demographics; Neighborhood characteristics; First-time homeownership 1. Introduction Recent evidence points to persistent racial gaps in US homeownership rates. As of 2002, ap- proximately 72 percent of white households owned their own homes, compared to approximately 47 percent of African American households [23]. This gap of approximately 25 percentage * Fax: +1 540 231 3367. E-mail address: dawkins@vt.edu. 0094-1190/$ – see front matter  2005 Elsevier Inc. All rights reserved. doi:10.1016/j.jue.2005.08.004