Gap in White-Black Ownership Hits Decade High
NAR study: The U.S. homeownership rate rose to 65.5% in 2021 – but Black ownership (44%) lags white ownership (72.7%) by 29 percentage points.
WASHINGTON – The U.S. homeownership rate has gradually increased during the last decade to hit 65.5% in 2021, up from 64.7% in 2011.
However, the Black homeownership rate hasn’t kept pace, even when compared to the increases of other racial groups. According to a new report released by the National Association of Realtors® (NAR), “people of color endure significant buying challenges throughout and even after their home purchase.”
The 2023 Snapshot of Race and Home Buying in America examines homeownership trends by race and location to explain current racial disparities in the housing market. Leveraging NAR’s latest Profile of Home Buyers and Sellers data, the report explores the characteristics of who home purchases – the who, why and what – along with the financial background of buyers by race.
The report found about 9.2 million more homeowners in 2021 than a decade prior, but homeownership rates varied significantly by race: The Black American homeownership rate – 44% – increased less than half of 1 percentage point (43.6% in 2011) and continues to lag well behind Hispanic Americans (50.6%), Asian Americans (62.8%) and White Americans (72.7%).
As a result, the homeownership gap between Black Americans and other racial groups has grown, especially when compared to white households (29%). It’s the largest Black-white homeownership gap in 10 years (26% in 2011).
Conversely, Asian Americans (up 5 percentage points) and Hispanic Americans (up 4 percentage points) saw the biggest homeownership rate gains over the last decade, with the Asian-American homeownership rate at an all-time high of 62.8%. White American homeownership grew by nearly 3 percentage points and has been consistently around 70% since 2017.
“Unfortunately, the incredible affordability challenges of the last year have hit minority homebuyers more than white buyers,” says Jessica Lautz, NAR deputy chief economist and vice president of research. “Black buyers are more likely to be first-time buyers who are more sensitive to changes in mortgage interest rates, while White buyers are more likely to have housing equity to rely on as they make a housing trade.”
Racial inequalities in housing affordability
To own a home, Black homeowners spend more of their income than all racial groups. Almost one in three families (30%) are cost-burdened, meaning they spend more than 30% of their income on housing. That’s followed by Hispanic Americans (28% of their income on housing), Asian Americans (26%) and white Americans (21%).
More than half of Black renter households (54%) spend more than 30% of their income on rent, also the most of any racial group. About 30% of Black renters are severely cost-burdened, spending more than 50% of their income on rent. Of white renters, 22% are severely cost-burdened.
NAR estimates that 17% of white renters can afford to buy a median-priced home compared to only 9% of black renters.
“Even among successful homebuyers, Black Americans have lower household incomes, which narrows the available pool of inventory they may be able to afford and makes their journey into homeownership even more difficult in this limited housing inventory environment,” Lautz says.
Racial disparities in the mortgage market
Beyond affordability, Black and Hispanic homebuyers face extra challenges getting a mortgage.
Black Americans have the highest denial rates for purchase and refinance loans. According to Home Mortgage Disclosure Act data, 20% of Black and 15% of Hispanic loan applicants were denied mortgages, compared with about 11% of white and 10% of Asian applicants.
Denial rates for Black Americans are even higher for home improvement loans:
- Denied for nearly 17% of home-purchase loans
- Denied for 17% of refinancing loans
- Denied for 51% of home-improvement loans
Buyer demographics by race/ethnicity
Using data from its latest Profile of Home Buyers and Sellers report, NAR analyzed the characteristics of recent homebuyers, reasons for purchasing, steps taken in the homebuying process, and the ways buyers financed their home purchase.
Among all buyers, white Americans made up the largest share (88%), followed by Hispanic Americans (8%), Black Americans (3%), Asian Americans (2%) and other (3%).
For down payments, Black Americans drew down 401(k) pension funds more than any other group (16%), which increased 2 percentage points from the year before (14%). Asian Americans received gifts (22%) and loans (7%) from a relative or friend more than all other racial groups.
Hispanic Americans had the largest share of student loan debt (46%), followed by Black Americans (33%), white Americans (17%) and Asian Americans (13%).
Discrimination in transactions
Homebuyers were also asked if they experienced or witnessed discrimination during their real estate transaction.
- 50% of Hispanic American homebuyers said they were steered toward or away from specific neighborhoods, followed by 29% of white, 12% of Black and less than 1% of Asian American homebuyers
- 46% of Hispanic homebuyers experienced discrimination when a homeowner or agent refused to show property, followed by 24% of Black, 15% of white and less than 1% of Asian Americans.
- 39% of Black American buyers reported discrimination through home appraisal, followed by 17% of Asian, 9% of white and less than 1% of Hispanic Americans.
NAR’s fair housing advocacy
- NAR co-chairs the steering committee for the Black Homeownership Collaborative, which outlined a seven-point plan to create 3 million net new black homeowners by 2030.
- NAR’s “ACT!” fair housing plan, launched in 2019, emphasizes “Accountability, Culture Change and Training” to advance fair housing in the industry.
- Its interactive training platform, Fairhaven, puts real estate professionals in simulated situations where discrimination in a real estate transaction can occur.
- The association’s implicit bias video and classroom trainings offer strategies to help Realtors provide equal professional service to every customer or client.
NAR also advocates that all levels of government:
- Support housing construction that’s affordable to the typical consumer
- Preserve, expand and create tax incentives to renovate distressed properties and convert unused commercial space to residential units
- Encourage and incentivize zoning reform
NAR and the Rosen Consulting Group’s Housing is Critical Infrastructure: Social and Economic Benefits of Building More Housing report describes many of NAR’s advocacy efforts. It examines the causes of America’s housing shortage and provides a range of actions that can effectively address this long-time problem.
© 2023 Florida Realtors®