As mortgage rates hit 5 percent, homeownership is becoming increasingly challenging for Black Americans, who already lag sorely behind whites in homeownership.
“The housing gap” between white and Black household ownership in the U.S. is “about as wide as it’s ever been,” Mike Fratantoni, an economist with the Mortgage Bankers Association trade group, told The Hill.
Discriminatory practices led to and continue to exacerbate the housing gap. “There’s lots of reasons for that,” he added. “But a big one is the level of household wealth, which is really an enormous gulf right now. Whether it’s coming up with the down payment or keeping payments sustainable, we’re seeing there’s a disadvantage.”
While the overall U.S. homeownership rate increased to 65 percent in 2020, up a record 1.3 points from 2019, with 2.6 million new home-owning households, homeownership rate for Black Americans was just 43.4 percent — lower than it was a decade ago, according to data from the National Association of Realtors.
“Housing affordability and low inventory have made it more challenging for all buyers to enter into homeownership, but even more so for Black Americans,” Jessica Lautz, NAR vice president of demographics and behavioral insights, said in a statement.
Black homeownership has dropped drastically in certain cities, according to a recent study by LendingTree that analyzed Census Bureau records to see how the share of homes owned by Black people in the nation’s 50 largest metro areas compared with the Black population in those cities. What LendingTree found was that in every city, Black residents own a disproportionately small number of homes compared with their population.
Nationwide, Black Americans account for 15 percent of the combined population of the 50 largest metro areas, but they own 10 percent of the owner-occupied homes in those cities. Meanwhile, whites comprise 64 percent of the population in those cities but own 76 percent of the owner-occupied houses, The Washington Post reported.
The cities with the widest disparity between Black homeownership rates and Black population rates include:
- Memphis: The city’s Black population is 47.37 percent, while 35.05 percent of its homes are Black-owned. This comes to a disparity of 12.32 points.
- Milwaukee: 16.47 percent of Milwaukee’s residents are Black, and just 6.51 percent of homes there are Black-owned — a disparity of 9.96 points.
- New Orleans: Blacks make up 34.98 percent of this city’s population, while 25.63 percent of its homes are Black-owned. This marks a 9.35-point disparity.
Cities with a smaller Black population had the smallest disparity in homeownership rates.The top three cities with smallest disparity between Black homeownership rates and Black population rates are:
- San Jose: 2.41 percent of this California city’s population is Black, and 1.38 percent of its homes are Black-owned — a disparity of 1.03 points.
- Los Angeles: Blacks comprise 6.54 percent of its population, and 5.24 percent of its homes are Black-owned, a disparity of 1.31 points.
- Salt Lake City: 1.88 percent of its population is Black, and 0.56 percent of its homes are Black-owned, a disparity of 1.32 points.
There are several reasons behind the nationwide housing gap, say real estate experts. Black Americans historically have faced systemic issues that have blocked homeownership, including a lack of intergenerational wealth, unfairly administered credit scoring and a holding a disproportional amount of debt, The Hill reported.
Another factor: Black America still has not recovered from the 2008 housing crisis, which disproportionately affected Black communities and other communities of color.
“Redlining prevents communities of color from gaining fair access to credit and is one of the key drivers of the homeownership gap,” Maureen Yap, a lawyer with the National Fair Housing Alliance, said earlier this month during a campaign against redlining. Redlining is a discriminatory practice of denying minority groups access to credit and other financial benefits. “It will take coordinated and concerted efforts to reverse centuries of discrimination in financial services, including the redlining of communities of color,” she added.