Beautiful Black family with two children carrying boxes in a new home. Photo Credit: istock / Ridofranz
Black homeownership in America continues to lag behind that of other groups, thus increasing the racial wealth gap. HEre are 5 things to know about homeownership as a factor in the wealth gap.
Recent statistics released by the National Association of Realtors show Black homeownership rates sit at 44.7 percent while white homeownership is 72 percent. Fortune reported white homeownership is 74 percent based on the most recent U.S. Census data.
Though the numbers vary slightly, both show white homeownership is at least 30 percentage points higher than that of Black Americans.
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The rate of Black homeownership has also dropped in the last decade, according to both data sources. Black homeownership also lags behind that of Hispanics, which sits at 49.1 percent.
Andre Perry is a senior fellow at Brookings Metro and author of “Know Your Price: Valuing Black Lives and Property in America’s Black Cities.” He said as a result of the homeownership disparity, Black Americans are missing out on wealth creation and the racial wealth gap is widening.
“Wealth begets wealth,” Perry told Fortune. “So, people without it are being left behind economically and socially. By not being able to participate in the recent wealth creation moment, we’re bolstering economic stratification and inequality.”
Coldwell Banker CEO Ryan Gorman agreed with Perry.
“The single biggest driver of wealth appreciation in this country is homeownership,” Gorman told Fortune. “Having that asset against which to borrow at relatively low rates can make all the difference in the world for individual and household financial planning. Last year alone, homeowners made more money from the appreciation of their home than the typical person in the U.S. made from their W-2 income, perpetuating that homeownership gap.”
According to the National Association of Realtors, the “net worth of a homeowner is approximately 40 times the net worth of a renter.”
Forbes reports: “Homeownership is central to building wealth because of key financial advantages like home value appreciation, tax savings and increased deductions, and the ability to borrow against the equity you have in your home.”
There is a historical record of racist practices like redlining and undervaluing Black neighborhoods exacerbating the problem of boosting Black homeownership and widening the racial wealth gap.
They are not in the past, Perry said, noting discrimination is still prevalent in a variety of ways.
“Lower credit scores among Black people reflect discrimination and lower wealth,” Perry said. “Current discrimination in labor markets doesn’t help. In addition, we know that equally qualified Black people are denied loans more and receive higher interest rates. Lower homeownership rates are not a coincidence.”
However, Gorman said there are practical ways to increase Black homeownership.
“There are several steps that cities can take to boost Black homeownership, and it starts with fair and equitable investments in communities,” Gorman said. “Decisions such as where to place freeways, which potholes to fix, planning for public transportation, and other basic infrastructure necessities should be prioritized through a socioeconomic lens.”
PHOTO: Beautiful Black family with two children carrying boxes in a new home. Photo Credit: istock / Ridofranz
