Homeownership Gap Between Black and White Owners Widens Over the Past Decade

An African American homeowner and disabled veteran reflects on the importance of owning a home in her family. For generations, their journey has mirrored the pursuit of a driver’s license – a rite of passage. Through the years of hard work and dedication, she has accumulated equity that has opened up financial possibilities, like supporting her son through college and considering a new business endeavor.

However, White-Jenkins acknowledges that this narrative is not universal among Black families, emphasizing the lingering disparity in homeownership rates between Black and White communities. According to a recent report by the National Association of Realtors (NAR), despite a slight increase in Black homeownership from 44% in 2021 to 44.1% in 2022, the gap remains substantial, with the White homeownership rate standing at 72%.

The racial homeownership gap has persisted and even expanded over the past decade, growing from 27 to 28 points. While homeownership rates for other minority groups, such as Asians and Hispanics, have seen notable increases, Black Americans face unique challenges in achieving the same level of homeownership.

According to the NAR research, the low supply of available homes combined with the high cost of housing has led to a decrease in the percentage of people who own a home overall in 2022. This trend has a greater impact on minority homebuyers, especially first-time buyers who find it challenging to come up with a down payment without the funds from selling a current home.

Minority buyers, facing systemic barriers and income disparities, find it difficult to save for a down payment in an environment where over half of US tenants pay more than 30% of their income towards housing. This challenge is exacerbated by higher levels of student debt among Black homebuyers, with nearly half reporting an average of $46,000 in student loans, the highest among racial groups.

Challenges in Minority Homeownership

Jessica Lautz, NAR’s deputy chief economist, underscores the difficulties faced by minority buyers, emphasizing that these challenges extend beyond financial constraints. Even successful minority homebuyers often grapple with higher rates of student debt, lower income levels, and systemic barriers, resulting in a higher rate of loan denials in the mortgage market.

The income gap further exacerbates the issue, with the median household income for Black Americans at $47,800 in 2022, compared to $75,700 for White Americans. Over the past decade, the income gap has widened, reflecting a $27,840 difference in median income.

Lautz notes that once Black borrowers apply for a mortgage, they encounter higher rates of refusal compared to White borrowers, often due to a high debt-to-income ratio or a low credit score. Additionally, mortgage rates for Black borrowers tend to be higher than those for White borrowers.

Despite these challenges, homeownership remains a beacon of hope for individuals like Sharan White-Jenkins, who actively champions the cause among her friends and extended family. Recognizing that not everyone has had the same upbringing, she provides guidance and support to those who may feel homeownership is unattainable.

In order to guarantee that every American, regardless of color or origin, may fulfill their ambition of becoming a homeowner, advocates and legislators are working to find answers as the country struggles with these differences.