New studies see challenges and reasons for optimism about black housing wealth

Just 54 years ago, the Fair Housing Act was signed, actively prohibiting housing discrimination based on race, color and national origin. However, a decades-old housing policy known as redlining has had a lasting effect on American society and the economic health of black households in particular.

Recently, additional government protections, social justice movements and an overall increase in wealth have pushed the housing market in the right direction, although there is still a long way to go.

As the Black History Month celebration continues, new research from and Redfin sheds light on the struggles of black homebuyers and reasons to be optimistic about homeownership blacks.

“Black Americans face many more barriers when it comes to achieving the American dream of homeownership, from mortgage denials to low property appraisals and more,” George said. Ratiu, head of economic research at “As a result, the Black homeownership rate currently remains the lowest in the country, underscoring how the difficult Covid housing market has compounded long-standing systemic issues facing Black homebuyers. today.”

He said data from the survey also highlights a gap in Black buyers’ access to essential resources to compete in today’s rapidly changing marketplace.

“Compared to respondents overall, fewer black buyers had gotten pre-approved for a mortgage and contacted an agent,” Ratiu said. “These trends illustrate the importance of providing fair housing resources and advice through initiatives such as the For Everyone microsite. Black Americans are playing an increasingly important role in the housing market. Closing the gap between racial landlords should be a top priority in the real estate ecosystem, and much work remains to be done.

The racial homeownership gap in the United States widens as black millennial buyers and women gain ground

The share of black Americans among all home buyers from October 2020 to September 2021 was only slightly higher than 10 years ago (+0.2 percentage points), according to

Black home buyers grew at a similar rate to their non-black peers in recent years until spring 2021, when the average annual rate for black buyers was 4.5 percentage points lower than other racial groups and ethnic.

On average, the growth of black female homebuyers consistently outpaced (+10.4% year-over-year) that of their male counterparts from October 2018 to September 2021.

Among all generations of black shoppers throughout the study period (October 2018 to September 2021), millennials had the fastest average growth rate (+13.8% year-over-year) ).

Some Black Homebuyers Have Succeeded During the Pandemic

Black Americans made up 20% of survey respondents who became homeowners between September 2020 and 2021, which was a higher rate than their white peers (16%), according to

At the same time, the share of potential 2022 buyers who tried to find a home in 2021 and were unsuccessful was higher among black buyers (19%) than the overall rate (15%).

Among those planning to buy in 2022, the top reasons Black Americans are waiting include the need for more time to save for a down payment (at 22% vs. 18% overall) and concerns about managing logistics (at 19% versus 15% overall).

Black buyers – including many newcomers – aspire to become homeowners but cite affordability issues

Asked by their reasons for buying a home in the next 12 months, the top motivators of Black Americans surveyed were achieving the dream of home ownership and the need for more space for their family. , each at 24%.

Newcomers make up 31% of Black Americans surveyed who plan to buy in the next year, or 2.6 times the overall share (12%).

Affordability is a major challenge for potential black buyers, with 17% looking to buy a home priced at $100,000 or less, compared to 10% of respondents overall.

While remote work has allowed some homebuyers to explore lower-cost housing markets farther from city centers, the rate of black buyers who said they needed to buy a home closer to work due to office reopening (34%) was higher than the overall average (26%).

Prospective black buyers face housing affordability issues but are financially ready to compete

Data from the survey suggests a lack of accessibility to critical resources. Compared to all respondents planning to buy in the next 12 months, fewer black shoppers said they had taken many actions that could help them stay ahead of the competition, including:

View online ads: 37% vs. 44% overall; research process and requirements: 25% vs. 29% overall; contact at least one real estate agent: 23% versus 28% overall; getting pre-approved for a mortgage: at 18% vs. 21% overall.

At the same time, many potential black buyers are willing to use competitive financial strategies, such as paying above the asking price: 31% are willing to go 21% or more above the asking price; larger down payments: nearly half (48%) plan to put at least 21% down; saving for down payments: 42% are putting money aside each month, 38% are reducing their daily expenses and 27% are selling their investments.

In 2021, black housing wealth hit an all-time high of $2.2 trillion in the third quarter of the year, indicating that black housing wealth may continue to improve over the next decade. Redfin’s chief economist, Daryl Fairweather, has just released a report explaining other reasons for optimism about black homeownership. Here are a few :

An overhaul of the credit system: The Financial Services Committee has proposed legislation that could narrow the credit gap between blacks and whites by protecting the creditworthiness of victims of predatory lending and creating federal oversight of credit scoring models.

The YIMBY movement: The YIMBY (yes in my garden) movement aims to remove exclusionary zoning that prohibits multi-family housing. There have already been several major wins in recent years, as seen in California, Oregon and Minneapolis, all places that have successfully eliminated single-family zoning.

Remote work: Normalizing remote work will allow companies headquartered in places with low black populations like Silicon Valley and Seattle to hire black workers in places where they are more likely to live, like Atlanta and Houston.

Black real estate wealth: The total value of black-owned homes in America rose 28.9% year-over-year to a record high of $2.2 trillion in the third quarter of 2021, Reserve data shows. federal. Black home values ​​— the value of real estate minus mortgage debt — also set a record high of $1.4 trillion, a 45% increase from a year earlier.

The share of real estate wealth held by black Americans also hit a record high, but remains disproportionately low at 6%, down from 5.3% the previous year. White (non-Hispanic) Americans own a disproportionate share of housing wealth at 75.7%, down from 77.1% the previous year. Blacks make up 13.4% of the US population, while non-Hispanic whites make up 60.1%.

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