Released: October 18, 2004
The Wealth of Hispanic Households: 1996 to 2002
V. The Ownership of Assets
Wealth may be accumulated in various forms and an analysis of the composition of wealth shows a key similarity as well as several differences across racial/ethnic groups. The single most important asset for all races and ethnicities is a house. Not surprisingly, households of all stripes are also quite likely to own vehicles. But Hispanic and Black households are much less likely than White households to own financial assets, including retirement accounts, and many minority households own no assets whatsoever. The SIPP data make it possible to distinguish across 14 major types of assets and liabilities. This section presents evidence on the ownership of these assets and liabilities by race and ethnicity.
The assets most likely to be owned by American households are a car and a house. As shown in Table 6, nearly 90 percent of White households, over three-fourths of Hispanic households and more than two-thirds of Black households report owning at least one car in 2002. The highest rate of homeownership is among White households with 74.3 percent indicating they owned a home in 2002. This rate is much higher than among Hispanic and Black households whose rates of homeownership in 2002 were 47.3 percent and 47.7 percent respectively. The rate of homeownership among Whites has increased every year since 1996 and is presently 2.4 percentage points higher than in 1996. The homeownership rate for Hispanic households also increased over time and was 3.1 percentage points higher in 2002 in comparison to 1996. However, the rate of homeownership among Blacks has remained flat since 1996. While the homeownership rate among Hispanics and Blacks is relatively low, homes are the most likely asset to be owned by these households after vehicles.1
Other assets, mostly financial, are less likely to be owned than houses or vehicles. The leading financial assets are interest earning accounts at financial institutions and non-interest bearing checking accounts. The former includes assets such as interest-earning checking accounts, savings accounts, money market accounts, and certificates of deposit. White households lead the way once again, with 69 percent reporting ownership of interest-earning accounts at financial institutions in 2002. This was nearly 30 percentage points higher than the rate among Hispanic households—42.4 percent—and the rate among Black households—40.3 percent. Ownership rates for non-interest bearing checking accounts are lower for all types of households. White households are at the front with 36.3 percent of them owing such accounts in 2002. The rates for Hispanic and Black households are 29.9 percent and 25.1 percent respectively. Overall, it is apparent that the majority of Hispanic and Black households do not own even the basic instruments offered by financial services companies.
Ownership of other financial assets among Hispanic and Black households is very low. Fewer than 10 percent of Hispanic households and only slightly more than 10 percent of Black households owned stocks and mutual funds in 2002. This contrasts with the 35 percent rate for White households. Hispanic and Black households are also less prepared for retirement as only about 20 percent of each group reports participation in a 401(k) or Thrift savings plans and fewer than 10 percent have IRA or Keogh accounts. Among White households, 34.5 percent had 401(k) or Thrift savings plans and 29.4 percent had IRA or Keogh accounts in 2002. Clearly, financial market participation for Hispanic and Black households is well below the norm for White households.
While the ownership of assets, especially financial assets, lags among Hispanic and Black households, they are about as likely as White households to hold unsecured debt. In 2002, over 45 percent of Hispanic households, 47 percent of Black households and 53 percent of White households had unsecured liabilities. These rates represent improvements over 1996 for all three groups. Nonetheless, it is fair to say that about one-half of all households in the U.S. held unsecured debt during the entire 1996 to 2002 time period.
Another perspective on the gap between White and minority households is provided by looking at the proportions of households that own no assets. Table 7 shows that 10.5 percent of Hispanic households and 16.4 percent of Black households reported owning no assets other than unsecured liabilities in 2002. These are households with debt but no positive asset position. The similar proportion for White households is only 2.5 percent. If one considers households that own no assets other than a vehicle or unsecured liabilities, the proportions rise to 25.4 percent for Hispanics and 27.2 percent for Blacks. The same proportion for White households is only 6.3 percent in 2002. Thus, while virtually all White households own at least some real estate, business equity or financial instrument, over one-quarter of Hispanic and Black households own no such assets. On the positive side, there has been some improvement since 1996 when these proportions were slightly worse for both Hispanics and Blacks.
- The estimated rates of homeownership from the SIPP data are very similar to those reported by the Census Bureau from its annual Housing Vacancy Survey. According to that survey, the homeownership rates by race and ethnicity in 2002 were as follows: Hispanics—47 percent, Whites—74.7 percent, and Blacks—47.4 percent. One difference between SIPP and the Housing Vacancy Survey is that the latter indicates a 4.2 percentage point increase in the homeownership rate for Hispanics between 1996 and 2002 instead of the 3.1 percentage point increase derived from SIPP. ↩