Census Shows Racial Disparities in Homeownership Are Rising in the US
And it appears that the American Dream — you know, the house with the white picket fence, 2.5 kids and a mortgage that doesn’t suck you into foreclosure — appears to be slipping even further away from minorities, according to a new exhaustive report by rental search firm Abodo Apartments.
Looking at the country as a whole, 71.3% of white Americans own homes, while only 41% of black Americans own a home, according to the latest U.S. Census numbers analyzed by Abodo. The study also looked at other minority groups — Hispanic-Americans and Asian-Americans — and found similar, albeit smaller, disparities.
Even more striking, said Abodo senior communications manager Sam Radbil in an email, is the disparity in home values between races.
He gives the example of a San Francisco, California-area neighborhood. “Oakland-Hayward, minority-owned homes were worth just 43.5% of their white peers’ homes,” Radbil said. “Of course, these numbers fluctuate broadly by city, but to see minority home values at less than half of their white peers is jarring.”
Black Homeownership Has Declined Faster Than That of Other Races
It’s no secret that the number of Americans who own homes has declined since 2006. The Great Recession crippled the U.S. housing market, with national homeownership declining from 67.3% to 63.1% from 2006 to 2016, according to the report.
But homeownership rates for black Americans have faced a steeper decline than that of white Americans. White ownership fell 3.8 percentage points in the last decade, while black American homeownership decreased 5.6 percentage points.
It’s a stark reversal, since black American homeownership jumped from 38.2% in 1960 to more than 47% by 2000, according to data provided by the Urban Institute.
Stalled by Lending Practices… and the Dreaded Down Payment
Black Americans were the only demographic group in the U.S. to have had an increase in homeownership between 2006 and 2007. It’s a counterintuitive data point that partially explains the reason the group has had such a difficult time crawling back from the housing crisis.
“This blip might represent first-time homeowners in minority populations taking advantage of the glut of cheap housing and widely granted subprime loans that immediately preceded the market crash,” the Abodo report stated.
Harvard economists, referenced in a Chicago Tribune article, attribute predatory lending tied with subprime loans as one of the drivers of this downward trend in African-American homeownership.
But there’s also the fact that putting a down payment on a home will set you back a pretty severe chunk of change. Believe me, I just did it this summer.
And since an income gap exists between the two groups, it can take between two and 19 years longer for someone in a minority group to save for a 20% down payment on a home than it would take a white person, Abodo reports.
The Cities Where Black Homeownership Is Strongest
Earlier this year, Wells Fargo announced it would undertake a 10-year, $60 billion plan to boost African-American homeownership by 250,000. There hasn’t been an update, and Wells Fargo has, uh, had some problems this year.
But, as the report concludes: “Racial disparities in homeownership are the product of a complex web of systemic inequality, and this report touches only on a few shallow indicators, without considering education, occupation, immigration status, and myriad other elements that have known impacts on financial security.”
Still, some cities are doing better than others in terms of homeownership among black Americans. Abodo looked at the 100 largest metropolitan areas as part of the analysis, and these are the top 10 cities when it comes to black homeownership:
- Charleston, South Carolina — 53.5%
- Columbia, South Carolina — 53%
- Augusta, Georgia — 52.3%
- Jackson, Mississippi — 52.1%
- Ventura, California — 51.5%
- Birmingham, Alabama — 49.6%
- Philadelphia, Pennsylvania — 49.1%
- Washington, D.C. — 48.9%
- Richmond, Virginia — 48.7%
- Daytona Beach, Florida — 48.2%
Alex Mahadevan is a data journalist at The Penny Hoarder.
The Penny Hoarder Promise: We provide accurate, reliable information. Here’s why you can trust us and how we make money.