Black Homeowners Experience Widening Racial Wealth Gap

Mortgage News March 10, 2023

Although there has been a rebound in Black homeownership, it has remained stagnant since the 1970s. Homeownership is a significant aspect of the American dream for many people, as it provides a reliable means of achieving economic stability and building wealth over generations.

According to a recent study conducted by Apartment List, Black homeownership has been hindered by cultural, political, and financial obstacles that have persisted for generations, underscoring the role of the housing market in perpetuating the nation’s persistent wealth gap. Despite some recent progress, the rate of Black homeownership remains notably low, which is a testament to the ongoing impact of a troubling historical legacy.

Based on the most recent figures released by the US Census Bureau, the current rate of Black homeownership is 44%. This upward trend in Black homeownership has been consistent with the nationwide pattern, having risen steadily over the last five years, from a recent low of 40.8% in 2016. Over this period, the number of Black homeowners increased by around 750,000, while the combined value of their properties grew by $700 million.

However, when looking at the larger historical picture, the rate of Black homeownership has remained low and mostly stagnant for many decades. Census data from every ten years shows that the only significant period of growth was from 1940 to 1980 when the rate nearly doubled from 23% to 45%. This progress was made despite the existence of various racist policies that intentionally limited Black access to homeownership. For example, property deeds contained racially restrictive covenants that prohibited Black families from residing in predominantly white neighborhoods and the Federal Housing Administration engaged in redlining, which entailed rejecting mortgage insurance for properties in Black neighborhoods. These practices were legal until the enactment of the Fair Housing Act in 1968.

The impact of this residential segregation is still prevalent today. Property values grew more slowly in Black neighborhoods than in affluent white suburbs, rendering homeownership a less dependable source of wealth creation for Black families. Presently, Black households own 8% of the nation’s homes, which account for only 5.8% of the aggregate home value. Additionally, the median home equity for Black homeowners is half that of white homeowners.


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