The Black-White Homeownership Gap Keeps Widening, and It's a Problem

It's really the opposite of progress.

It's long been said that homeownership can lend to more financial stability. When you own a home, you get to build equity in it. That equity can then be borrowed against or used to attain upward financial mobility (for example, you can use the equity in your home to eventually upsize to a larger space). When you're renting a home, though, you're effectively paying a landlord's mortgage, allowing them to enjoy all of the financial upside.

It's therefore disturbing to learn that housing equality between Black and white homeowners worsened in the decade since the Great Recession, according to the National Association of Realtors (NAR). And that means Black home buyers remain at a serious disadvantage.

A big problem that hasn't gotten better

The national homeownership gap between Blacks and white owners widened 1.5% between 2010 and 2021, according to Today's Homeowner. All told, the Black homeownership rate is just 43%, compared to 72% for white owners. That's a huge difference, and it's one that hasn't really budged in 50 years.

Now to be fair, the Black-white homeownership gap is greater in some parts of the country than others. Today's Homeowner analyzed data from the NAR and U.S. Census over a 10-year period and found that Southern states like Alabama, Georgia, and South Carolina tended to have the narrowest gaps. Meanwhile, Midwestern states like Minnesota, North Dakota, South Dakota, and Wisconsin had the widest gaps.

The NAR says incidents of housing discrimination are also lower these days than in the past. But still, work needs to be done.

Action needs to be taken

As part of his campaign pledge and presidency, President Joe Biden has said he's committed to taking action to address racial discrimination in the housing market. One area his administration is targeting specifically is home appraisals.

A 2018 Brookings study found that homes in neighborhoods where the majority of property owners are Black tend to be substantially undervalued compared to homes in areas where the majority of owners are white. Biden's administration is aiming to correct for this so that Black homeowners are better able to build and tap home equity.

The Biden administration is also working to rethink exclusionary zoning laws. Rules like minimum lot sizes, mandatory parking requirements, and limits on multifamily housing tend to inflate construction costs, thereby making certain neighborhoods off-limits to lower-income buyers. Changing those rules could open the door to more affordable housing opportunities.

At the same time, the NAR and a growing number of local real estate associations have been issuing policies to try to encourage homeownership opportunities for minority buyers. The NAR has specifically released a fair housing action plan to encourage Realtors to lead the fight against housing discrimination. The NAR also provides bias training to help real estate professionals recognize and overcome prejudices that could be impacting minority borrowers.

There are positive steps. But more have to be taken, and soon. The fact that the Black-white homeownership gap keeps widening is downright unacceptable, and lawmakers and local professionals alike need to step up and do what they can to close it.