Overall, overt housing discrimination has lessened through the years following regulations guided by Fair Housing laws; however, it is nowhere near completely dissipated. And while some may not be able to identify it in their day to day, the diversity homeownership gap is a clear example of the persisting challenges that must be addressed, as discussed by the National Association of Real Estate Brokers (NAREB) 2021 State of Housing in Black America (SHIBA) Report.
In fact, the study found that the gap in homeownership between Black and White families is wider today than when housing discrimination was legal.
According to the U.S. Census, as of Q2 2021, the Black homeownership rate was 44.6% compared to 74.2% for Whites, leaving a gap of 29.6%. In 1960, before the Civil Rights movement and Fair Housing laws, the gap fell below that threshold at 27 points between Black homeownership (38%) and White homeownership (65%).
Several major metro areas lag behind when it comes to the Black homeownership rate, with Minneapolis reporting a 25% share of Black families who own their own homes—the lowest rate in the U.S.
“The SHIBA report takes a critical look at the causes for the disparity in Black homeownership rates when compared to Whites and recommends initiatives aimed at closing the gap,” said Lydia Pope, NAREB’s president, for the report, adding that in the last 15 years, Black homeownership experienced the biggest decline of any demographic.
Racial bias has seeped into housing, informing practices that now more subtly discriminate, such as racial steering, “where real estate agents deliberately steer Black homebuyers away from White neighborhoods and toward neighborhoods with larger concentrations of people of color,” says the report.
“There are new biased practices that are obstructing Black homeownership in communities across the country,” said Pope. “For instance, housing providers often don’t advertise available units and discriminatory digital marketing has become more common due to the proliferation of social media and online housing advertising. We need new tools to address this new wave of housing discrimination.”
The SHIBA report analyzes these discriminatory barriers to homeownership, as well as government programs that failed to increase Black wealth or bridge the diversity gap.
The typical White family has eight times the amount of wealth compared to the typical Black family—totaling an estimated $24,100 median net worth for Black households compared to $188,200 for White families.
While homeownership is the largest component of median household wealth—it accounts for 67% of an average household’s net worth—home equity plays a bigger role for Black households, averaging 70% of the net worth compared to 59% of a White household.
Discriminatory practices flourish in more areas than one, impacting the lending space as well and providing an unfair advantage for some. According to the report, in 2020, Black mortgage loan denials (16%) more than doubled White denials (7%) —and these numbers haven’t changed much since 2019.
And when it comes to actually building wealth via equity, progress has been slower for Blacks who secured mortgages, as their homes have appreciated less or are valued less than similar homes located in White communities. In fact, a Brookings study showed that homes in Black neighborhoods appraised for 23% less than similar homes in White neighborhoods.
“Blacks have made little, if any, strides at closing the homeownership gap,” says Pope. “Systemic discriminatory regulations and policies continue to thwart any meaningful effort at increasing Black homeownership.”
To read the full report, click here.