Despite improve racial equality by leaps and bounds, the U.S. housing market continues to struggle with racial disparities.

Through much adversity, African Americans have made considerable strides towards equality in the U.S. However, barriers to homeownership, while much less prominent than in years past, still remain, according to a new study.

In a collaborative effort entitled “Emerging Forms of Racial Inequality in Homeownership Exit, 1968-2009,” sociologists from Rice University and Cornell University delve deep into the hurdles African Americans face when transitioning out of homeownership. Using longitudinal data from the Panel Study of Income Dynamics, which accounts for the last four decades, researchers discovered African Americans are consistently 45 percent more likely to switch from owning a home to renting them.

One Step Forward, Two Steps Back

Starting in the late 60s and continuing on into the 70s and 80s, African Americans experienced slight increases in attaining homeownership, but that trend began to slowly reverse itself in the 1990s.

The study’s authors explain this shift in racial stratification as a result of less market exclusion, and more market exploitation.

At the beginning of the new millennia, African Americans were more than twice as likely as whites with similar incomes to sign subprime loans, and the numbers were even more dismal among lower-income African Americans.

The Creation of the Subprime Market

Gregory Sharp, lead author of the study and postdoctoral fellow at Rice University, says that following the passage of the 1968 Fair Housing Act, which officially outlawed discrimination in the housing market, African American homeowners were no more or less likely to become renters than their white counterparts. Over the next 30 years, however, Sharp says that emerging racial disparities changed that dynamic.

By 2000, African Americans who bought into the housing market were 50 percent more likely to eventually lose their homeowner status than that of similar white owners, according to the study. To account for these changes, Sharp points to the 1980s when Congress made the landmark decision to remove interest rate caps on first-lien home mortgages. This resulted in banks offering loans with varying interest rate schedules, which ultimately contributed to the creation of the subprime market.

“African American homebuyers heightened subprime rates were not only due to their relatively weaker socioeconomic position,” Sharp says, “but also because lenders specifically targeted minority neighborhoods.”

Cornell Assistant Professor and the study’s co-author Matthew Hall reiterates that the U.S. has taken several important steps towards racial equality in the last several decades, but acknowledges that the divide between whites and minorities is both vast and still growing.

Hall and Sharp hope their research will encourage further research and analysis into the growing racial disparities of the U.S. housing market.