By Bryan Greene
Only 44% of black Americans own a home, compared to 73% of white Americans
This gap is at least partly a result of decades of policies that divided Americans by race and national origin.
The home ownership rate in the U.S. has steadily increased over the past decade and is over 65% in 2021. Unfortunately, this growth is not evenly distributed.
The black homeownership rate in America has remained virtually unchanged at 44%, compared to figures of about 73% for white Americans, 63% for Asian Americans and 51% for Hispanic Americans. This racial gap has widened since the Great Recession of 2008.
Inequality has significant implications because home ownership is critical to building wealth and financial security. We have to close the gap. Achieving this will require the best efforts of U.S. policymakers, real estate industry leaders, real estate professionals and the millions of people who help make homeownership a reality for countless families across the country.
This gap is at least partly a result of decades of policies that divided Americans by race and national origin. In the early 20th century, cities across the country passed racist zoning ordinances to keep black homeowners out of white neighborhoods. After the U.S. Supreme Court declared these policies unconstitutional, cities continued to protect property values in white neighborhoods while building factories and highways in colored neighborhoods.
Meanwhile, starting in the 1930s, the federal government created maps of American cities that designated predominantly nonwhite areas as too risky for mortgage lending. This practice, known as “redlining,” effectively barred most black Americans (and others who lived in communities with black residents) from receiving federally insured home loans. The American mortgage industry adhered to these practices for decades.
Indeed, when white veterans returned home from World War II, they were greeted with inexpensive homes in new, federally funded suburban neighborhoods, while returning black veterans were excluded from the same communities by federal mandates.
With the passage of the Fair Housing Act in 1968, the federal government made these practices illegal. But by that point, the racial divide in homeownership in America had already deepened.
This is particularly relevant now as the market has become extremely challenging for first-time buyers due to skyrocketing house prices and record low housing inventory. Last year, first-time buyers accounted for just 26% of homebuyers, the lowest proportion since such records began in 1981.
This crisis is largely caused by restrictive zoning laws that prohibit the development of smaller lot sizes and denser, often more affordable housing units – putting prices out of reach for those who want to become homeowners, especially people who cannot rely on generational wealth payment .
If these barriers remain in place, the demographic gap in homeownership will inevitably continue to widen—as will the overall racial wealth gap in America.
A federal down payment assistance program would help millions of Black Americans become homeowners.
At the same time, policymakers must ensure that potential Black homebuyers have equal access to financing their home purchase. After all, saving for a down payment is one of the main obstacles to buying a home. While many first-time buyers rely on support from family members, young Black adults are less likely to have relatives who own a home and have the wealth to provide that support. Fortunately, some state and local governments and nonprofit organizations already offer down payment assistance in the form of grants or loans. However, the federal government currently lacks its own program for this. A federal down payment assistance program would help millions of Black Americans become homeowners.
Additional dedicated loan programs could also help potential homeowners from minority communities. These programs, authorized under the Equal Credit Opportunity Act (ECOA), allow lenders to use special rules to make loans to economically disadvantaged groups.
Congress can incentivize communities to implement these reforms by establishing a competitive grant program to encourage communities to take active steps to eliminate barriers to new and affordable housing, including those that impede the construction of new housing through aging zoning. or prevent land use regulations. ‘
Federal lawmakers can also help boost the production of affordable housing through tax credits, such as those included in the proposed Neighborhood Home Investment Act — which would encourage developers to build and renovate one- to four-unit condominiums. This bill currently has 31 bipartisan cosponsors in the House of Representatives and 10 bipartisan cosponsors in the Senate.
Real estate agents can help achieve these goals by guiding potential buyers to both special loan and down payment assistance programs and using their expertise to advocate for zoning reforms and tax credits that improve affordability.
Bridging the homeownership gap is not just about creating a fairer housing market. It is critical to building and sustaining thriving communities and to the growth of the U.S. economy in general. By working to break down the barriers that have long prevented Black Americans from accumulating wealth, policymakers, real estate executives and real estate agents can help create a lasting path to prosperity.
Bryan Greene is vice president of policy advocacy at the National Association of Realtors.
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-Bryan Greene
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10/18/23 0720ET
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