More evidence is emerging that points to various ways that financial discrimination is limiting homeownership among Black Americans.
A new report suggests that mortgage companies deny loans to Black applicants at a higher clip than white counterparts, with 45.7% of Black Americans being homeowners as of 2023, the National Association of Real Estate Brokers and its State of Housing in Black America study found. The figure hasn't moved much from 45.3% in 2022, 44.6% in 2021 and 47% in 2020, U.S. Census Bureau data shows, while white homeownership rates were 73% to 76% in the same time.
The NAREB findings dovetail with a growing body of housing discrimination research, including data from a study in January 2023 from the Urban Institute. That economic and social policy research group found that Black Americans were able to purchase a home in the pandemic partly because mortgage rates had fallen to favorable terms, but tens of thousands of Black house hunters were shut out due to the nation's lack of starter homes, competition from property investors and application denials from banks.
Black homeownership is in a state of emergency, NAREB President Courtney Rose said in a statement, adding that homeownership rates among Black Americans were flat or falling even before the coronavirus halted the nation's economy and housing market. The report's findings are particularly troubling because Black women and Black millennials — two subgroups that saw their homeownership rates spike during the pandemic — have recently pumped the brakes on purchasing a home, Rose said.
When millennials, those born between the early 1980s and mid-1990s to early 2000s, slow “their home purchases, it curtails opportunities for intergenerational wealth,” Rose said in the statement. “Their success determines the aggregate potential for future Black homeownership increases.”
For many Americans, the go-to method for building wealth is buying a house, but Black Americans have historically lagged in that category. Economists and researchers have said the lag is concerning because a home is often the first, and sometimes only, asset Black families have for passing wealth to their younger family members.
Stagnant ownership rates
NAREB released its report during a panel discussion last Friday in Atlanta where Mayor Andre Dickens and Acting U.S. Department of Housing and Urban Development Secretary Adrianne Todman attended.
Black homeownership hasn't climbed for a couple of reasons, the NAREB report said. First, a greater share of Black mortgage applicants were denied home loans compared to white applicants. In 2023, Black Americans had a 17% denial rate compared to white applicants at 7%, the report found.
The number of Black millennials applying for home loans fell roughly 21% between 2022 and 2023, further harming homeownership rates, NAREB said. Black Americans have also been known to face more unfavorable loan terms than White homeowners, data from the National Association of Realtors collected over the past decade shows.
The Urban Institute wrote in its study that "the United States’ long-standing racial homeownership gap needs to be reckoned with."
Researchers from the Urban Institute and other organizations say there are a few ways to help increase Black homeownership.
"More flexibility with respect to credit score cutoffs and ways to demonstrate ability to maintain regular payments would be particularly effective, as credit scores and predicted default likelihood disproportionately prevent Black households from attaining homeownership," the Urban Institute report concluded.