Gap between Black and white renting families who could afford a mortgage narrowed significantly during the pandemic
- None.
- None.
Insights
From an economic perspective, the homeownership gap between Black and white households, despite narrowing in terms of mortgage affordability, remains a significant concern. Homeownership is not only a key source of wealth creation for families but also a driver of broader economic activity. The persistent gap implies that there are systemic issues beyond affordability affecting the ability of Black families to own homes. This could include factors such as creditworthiness, discrimination in lending practices, or disparities in wealth accumulation due to historical inequalities.
Moreover, the decrease in renting families able to afford a mortgage across all races by nearly half from 2021 to 2022 may indicate tightening financial conditions, potentially due to rising interest rates or housing prices outpacing income growth. This contraction could have a dampening effect on the housing market and, by extension, the broader economy. It's important to monitor these trends as they can influence consumer spending, construction activity and financial stability.
When examining the housing market, the discrepancy in homeownership rates, with white households owning homes at a 73% rate compared to 44% for Black households, represents not only a societal challenge but also a market inefficiency. Over half of the top 50 metropolitan areas showing a gap of 30 points or more indicates a widespread and deep-rooted issue. For businesses operating within the housing and mortgage industries, this gap highlights a significant underserved market segment. Companies that develop strategies to address these barriers could tap into new customer bases and drive market expansion.
Furthermore, the data could suggest potential shifts in consumer demographics that may affect future housing demand patterns. As market research analysts, recognizing these patterns is crucial for advising companies on where to focus development efforts and marketing strategies to align with evolving consumer needs.
Legally, the report's findings could have implications for fair lending laws and regulations. The disproportionate rate of mortgage denials for Black families, despite improved affordability, may raise questions regarding compliance with the Fair Housing Act and Equal Credit Opportunity Act, which prohibit discrimination in lending. Financial institutions may need to reevaluate their lending criteria and practices to ensure they are not inadvertently perpetuating racial disparities in homeownership. This could lead to increased scrutiny from regulatory bodies and necessitate changes in industry practices to promote fair lending.
Additionally, the persistent homeownership gap may prompt policymakers to consider new legislative measures or enforcement strategies to address the underlying causes of these disparities. Legal professionals specializing in housing and discrimination law will be essential in guiding these efforts and ensuring that any new policies are effective and equitable.
Study underscores that factors not related to income are keeping the Black-white homeownership gap wide
- Racial mortgage affordability gap shrunk by more than a third since 2012
- Among all races, renting families able to afford a mortgage dropped by nearly half from 2021 to 2022
- White households own homes at a
73% rate, while Black households own at44% , with over half of the top 50 metros showing a gap of 30 points or more
In 2022, approximately
About
"Despite the significant decline in mortgage affordability in the past two years, millions of families who do not own their home have the means to afford the largest share of a homeowner's cost — the mortgage," said Zillow Senior Economist Orphe Divounguy. "While some families may choose to rent, many are simply constrained. It's crucial to recognize the existence of additional barriers beyond monthly cost, including access to funds for a down payment and closing costs — as well as other barriers that significantly contribute to mortgage denials, like insufficient credit scores and lack of access to credit. These barriers especially impact people of color."
Still, among all races, the number of renting families able to afford a mortgage dropped to 6.3 million in 2022 from 12.9 million in 2021, as mortgage rates doubled. While higher mortgage rates and higher prices affected everyone, the median family income of renters rose more for Blacks than for whites since 2012. Regions where Black family incomes rose most generally experienced a greater decline in the racial mortgage readiness gap during the 2012 to 2022 period.
Racial disparities in home values, homeownership rates and credit security
Even though the incomes of Black renting families rose faster during the pandemic, significant disparities persist in homeownership rates and home values between Black and white Americans. Nationally, white households owned homes at a much higher rate (
Compounding the issue, the typical home owned by a white family is still worth far more than the typical home owned by a Black family. Although there has been incremental progress in narrowing the home value gap, it still exceeds 10 percentage points in 42 of the top 50 metro areas.
Discriminatory lending practices and higher denial rates for Black mortgage applicants, compounded by credit history issues, also pose challenges to housing equity. In 2022, Black applicants saw a
Initiatives aimed at things like enhancing access to down payment assistance and credit-building opportunities as well as implementing reforms in zoning, together with efforts to construct and preserve affordable housing in thriving communities, are vital.
Housing Inequalities by Race
Top 50 metros | Share of Black Families (non owners) | Share of White Families (non owners) | Share of Families | Typical Home (in percentage points) | Homeownership Gap: (in percentage points) |
7.8 % | 12.5 % | 11.9 % | 17.9 pp | 28.9 pp | |
2.6 % | 11.5 % | 6.9 % | 15.7 pp | 33.0 pp | |
1.1 % | 4.2 % | 2.1 % | 30.8 pp | 25.7 pp | |
8.3 % | 21.9 % | 16.3 % | 39.4 pp | 33.5 pp | |
6.5 % | 13.5 % | 10.6 % | 22.5 pp | 30.2 pp | |
11.6 % | 19.3 % | 13.7 % | 22.9 pp | 29.2 pp | |
6.2 % | 12.8 % | 9.1 % | 9.6 pp | 19.1 pp | |
7.3 % | 15.2 % | 12.8 % | 28.3 pp | 27.1 pp | |
4.7 % | 13.1 % | 7.2 % | 22.2 pp | 27.2 pp | |
8.1 % | 12.0 % | 10.1 % | 17.7 pp | 24.3 pp | |
2.8 % | 5.4 % | 4.8 % | 18.1 pp | 31.3 pp | |
4.2 % | 5.5 % | 4.4 % | 14.2 pp | 33.7 pp | |
0.3 % | 4.2 % | 2.5 % | 29.2 pp | 29.2 pp | |
4.4 % | 3.8 % | 3.5 % | 1.2 pp | 30.6 pp | |
13.3 % | 19.6 % | 18.6 % | 45.4 pp | 34.0 pp | |
2.3 % | 4.5 % | 4.5 % | 16.7 pp | 34.3 pp | |
7.1 % | 7.8 % | 7.7 % | 14.0 pp | 46.0 pp | |
1.7 % | 2.1 % | 1.8 % | 24.4 pp | 32.3 pp | |
5.4 % | 10.6 % | 9.2 % | 11.3 pp | 27.0 pp | |
1.3 % | 4.2 % | 3.6 % | 12.7 pp | 26.0 pp | |
10.0 % | 13.4 % | 12.1 % | 16.9 pp | 30.8 pp | |
12.0 % | 17.6 % | 17.3 % | 44.7 pp | 32.9 pp | |
6.3 % | 10.0 % | 7.6 % | 13.2 pp | 24.4 pp | |
7.0 % | 12.6 % | 10.2 % | 18.2 pp | 31.5 pp | |
4.9 % | 16.6 % | 10.1 % | 10.5 pp | 28.0 pp | |
2.8 % | 3.1 % | 3.1 % | 3.7 pp | 38.9 pp | |
2.1 % | 3.8 % | 3.2 % | 5.8 pp | 28.5 pp | |
10.9 % | 20.1 % | 19.7 % | 26.6 pp | 39.9 pp | |
6.8 % | 13.4 % | 12.8 % | 18.9 pp | 39.5 pp | |
6.4 % | 6.3 % | 5.5 % | 22.0 pp | 23.9 pp | |
3.6 % | 7.5 % | 5.4 % | 5.1 pp | 34.0 pp | |
7.9 % | 15.7 % | 13.6 % | 25.1 pp | 32.5 pp | |
10.7 % | 13.6 % | 12.9 % | 20.6 pp | 36.2 pp | |
9.9 % | 16.4 % | 14.6 % | 9.4 pp | 33.3 pp | |
11.2 % | 23.8 % | 19.1 % | 40.6 pp | 36.0 pp | |
0.0 % | 3.5 % | 1.9 % | 17.6 pp | 33.9 pp | |
3.0 % | 7.3 % | 6.3 % | 14.4 pp | 27.6 pp | |
7.9 % | 13.4 % | 10.2 % | 7.1 pp | 27.9 pp | |
2.3 % | 5.1 % | 4.8 % | 10.1 pp | 26.0 pp | |
9.5 % | 9.9 % | 9.9 % | 21.1pp | 27.2pp | |
5.3 % | 12.5 % | 10.4 % | 38.2 pp | 43.9 pp | |
10.1 % | 17.0 % | 15.6 % | 19.3 pp | 33.9 pp | |
3.5 % | 8.1 % | 6.6 % | 15.5 pp | 24.9 pp | |
12.8 % | 20.8 % | 16.2 % | 32.7 pp | 31.2 pp | |
9.0 % | 12.1 % | 12.2 % | 13.0 pp | 21.8 pp | |
9.3 % | 14.5 % | 13.3 % | 29.4 pp | 38.1 pp | |
5.3 % | 17.4 % | 11.3 % | 22.4 pp | 26.4 pp | |
5.8 % | 3.6 % | 3.0 % | 7.5 pp | 45.0 pp | |
9.4 % | 13.5 % | 15.7 % | 23.4 pp | 32.5 pp | |
9.5 % | 14.1 % | 13.4 % | 41.5 pp | 33.1 pp | |
9.9 % | 11.1 % | 11.5 % | 46.4 pp | 28.0 pp |
About Zillow Group:
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All marks herein are owned by MFTB Holdco, Inc., a Zillow affiliate. Zillow Home Loans, LLC is an Equal Housing Lender, NMLS #10287 (www.nmlsconsumeraccess.org). © 2023 MFTB Holdco, Inc., a Zillow affiliate.
1 For the purpose of this analysis, "family" refers to a related group within a household, as identified in the American Community Survey.
2 This assumes a family can only afford a
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FAQ
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