THE EXPANSION OF MORTGAGE OPTIONS to boost homeownership is a little late coming, according to research from the University of Southern California Lusk Center for Real Estate that shows minorities consistently have lower homeownership rates than whites. Homeownership rates for blacks averaged roughly 26 percentage points below that of whites, while Hispanic ownership rates were off by approximately 28 points throughout the study's 20-year period ending in 2001.

Although homeownership has grown across all demographics, the gap is a result of income and education disparity among the races. The government and housing industries have tried to encourage home-ownership by teaming low interest rates with new types of loans, more flexible underwriting standards, and a broader secondary mortgage market. Yet, as of 2004, more than three-quarters of whites own homes while only about half of blacks and Hispanics do.

Stuart Gabriel, one of the study's authors, says the problem's persistency is disconcerting. “While minorities and whites have experienced gains in home-ownership, the gap really hasn't closed. You would think ‘how can that be?' given all that has occurred expressly to increase minority homeownership,” he explains.

However, the study also indicated that the disparity may level off given the number of minorities saving for a home more than doubled in the past two decades.

Homeownership rate discrepancies mean profit potential for big builders. Because fewer minorities own homes but more are saving for them, a high potential for future homeownership exists. “This translates to a tremendous market opportunity for builders,” Gabriel says. “Those builders who figure out how to deliver housing options in the places and at the price points needed will reap the benefits thereof.”