Closing the homeownership gap and protecting equity/wealth of Black Americans
Homeownership is just a dream for many Black Americans as the racial homeownership gap — comparative to white Americans — continues to persist. Currently, 74 percent of white people own their own homes — compared to 45 percent of Black people. The gap is much wider in some U.S. cities and states — as Black people lag significantly behind white people in homeownership rates. In fact, Black people have the lowest homeownership rate of any racial or ethnic group. Today, the gap is much wider than 50 years ago — despite the passage of fair housing laws in the 1960s and 1970s that aimed to bring racial parity to the U.S. housing market.
Manifested in the homeownership gap is wealth disparity, and there’s a stark difference — based upon skin color. Data shows that white people have a net worth of $171,000 — compared to $17,150 for Black people. This significant difference can be attributed to multiple factors, but it’s well known that homeownership is a critical contributor to wealth accumulation in the U.S. Wealth disparity is a focus area for President Biden, who in June talked about the topic and new White House initiatives to build Black wealth while touring the Tulsa, Oklahoma community once known as Black Wall Street. Biden has said the U.S. must eliminate systemic racism across its laws and institutions to ensure Black people have opportunities to advance and prosper.
Systemic racism and discrimination are deeply rooted in the U.S. housing market. Redlining and other forms of discrimination — often perpetuated at the local, state, and federal levels via anti-Black and segregationist housing/zoning ordinances and policies — have laid the foundation for the disparities that exist today. Affordability and access to credit have also adversely impacted Black homeownership. And, for decades, research indicates that homes in predominantly Black neighborhoods are typically appraised at lower values — compared to those in predominately white neighborhoods. A 2018 report by the Brookings Institution found the devaluation of homes in Black neighborhoods adds up to $156 billion in cumulative losses for Black homeowners.
“Equity that families have in their homes is the main source of wealth for middle-class Americans. African-American families today, whose parents and grandparents were denied participating in the equity-accumulating boom of the 1950s and 1960s, have great difficulty catching up now.”
— Author Richard Rothstein, The Color of Law
To highlight the seriousness of the issue, it’s important to point out homes owned by Black people — in predominately white neighborhoods — are devalued, too. Upon appraisal, any signs of Black inhabitance (photos, paintings, or other items) could cause a home to be devalued, albeit illegal.
In August 2020, a Jacksonville, Florida family attempted to take advantage of low refinance rates. The interracial couple lives in a predominantly white neighborhood — where the price of a home is typically between $350,000 to $550,000. The first appraiser valued the home at $330,000. Disappointed and suspecting discrimination, the couple requested a second appraisal. However, before the second appraisal, they decorated the house with white paintings and photos. The home was appraised at $465,000 — 40 percent more than the first appraisal.
In May 2021, a similar situation was reported in Indianapolis, Indiana when a Black homeowner attempted to refinance her home. The remodeled three-bedroom home is located in a historic Black neighborhood. The first two appraisers valued the home at $125,000 and $110,000, respectively. The homeowner was shocked and disappointed. A third appraiser later valued the home at $259,000 — only after the homeowner opted to not disclose her race and gender on the application, removed items from the house that would reveal her race, and had a white friend “stand in” as the owner.
For Black Americans who have overcome the barriers to homeownership, like those in Jacksonville and Indianapolis, as well as countless others whose stories of devaluation haven’t been told, it’s imperative that fair housing laws are strictly enforced — with local, state, and federal housing agencies being held 100% accountable for protecting the equity/wealth of Black Americans.
Today’s unfortunate reality is that fewer Black people are achieving the American dream of homeownership — thus, contributing to the widening racial wealth gap. This alarming trend must be reversed with a sense of urgency. Only through immediate and intentional actions — by lawmakers, civic leaders, and business leaders — can our nation begin to remedy the adverse impacts of decades-old ordinances and policies (at the local, state, and federal levels) that discouraged, restricted, and in many cases, prohibited Black homeownership.
