Persistent Racial Homeownership Gap: Challenges and Solutions
Homeownership has long been seen as a pathway to building wealth and creating generational prosperity. However, for many Black families in the United States, the dream of homeownership remains elusive. Despite some progress in recent years, the persistent racial homeownership gap continues to hinder the ability of Black families to create and pass down wealth for generations.
Sharan White-Jenkins, a proud Black homeowner in Jamaica, Queens, New York City, understands the power of homeownership firsthand. Her family has a long history of owning homes, dating back to her grandparents who purchased a home on the Virginia plantation land where they were once enslaved. For White-Jenkins, homeownership is not just about having a place to live; it’s about building equity and creating generational wealth.
“The Brooklyn brownstone my parents bought is now worth over $2 million. When they pass, it comes to me and my sisters. That is wealth we wouldn’t have had if they had rented,” White-Jenkins explained.
However, the reality is that Black homeownership rates still lag significantly behind those of White homeowners. According to a new report from the National Association of Realtors (NAR), the Black homeownership rate in 2022 was only 44.1%, compared to the White homeownership rate of 72%.
The racial homeownership gap has been a persistent issue in the United States, and despite some modest improvements in recent years, the gap has actually widened over the past decade. In 2012, the gap between Black and White homeownership rates was 27 points, but it has since expanded to 28 points.
While other minority groups have seen substantial increases in homeownership rates, such as Asians reaching a record high of 63% and Hispanics reaching a record high of 51.1%, Black homeownership rates have remained stagnant.
So, what is contributing to this persistent racial homeownership gap? One major factor is the affordability crisis in the housing market. The skyrocketing prices and limited inventory have made homeownership increasingly unaffordable for many Americans, especially minority homebuyers.
“The impacts of housing affordability and limited inventory are more extreme for minority buyers,” said Jessica Lautz, NAR deputy chief economist. “More than half of them are first-time buyers who must come up with a down payment and don’t have the sale of an existing home to rely on.”
Saving up for a down payment becomes even more challenging when a significant portion of income goes towards unaffordable rent. A recent study from the Joint Center for Housing Studies of Harvard University found that approximately half of all tenants in the US pay more than 30% of their income towards housing.
Minority homebuyers also face additional systemic barriers and disparities in income and wealth. Black homebuyers, in particular, often carry a higher amount of student debt, which hampers their ability to save for a down payment. Additionally, the median household income for Black Americans is significantly lower than that of White Americans, further exacerbating the gap.
Furthermore, once Black borrowers apply for a loan, they face higher rates of denial compared to White borrowers. Factors such as high debt-to-income ratios or low credit scores often contribute to these disparities. Additionally, mortgage rates for Black borrowers tend to be higher than those for White borrowers.
Despite these challenges, individuals like Sharan White-Jenkins are determined to champion homeownership among their friends and extended family. She understands that not everyone has had the same upbringing or exposure to homeownership, which can make it feel unattainable for some.
“I help them step by step,” White-Jenkins said. “That way we won’t have any surprises.”
Closing the racial homeownership gap will require a multifaceted approach. Addressing the affordability crisis, providing financial education and support, and combating systemic barriers are all crucial steps towards creating a more equitable housing market.
As the nation grapples with these challenges, it is essential to recognize the importance of homeownership in building wealth and creating opportunities for future generations. By working together to address the underlying issues, we can strive towards a more inclusive and equitable housing landscape for all Americans.