As home prices soared last year, homeowners have seen their wealth skyrocket thanks to rising home equity. But achieving homeownership and being able to tap into that wealth growth potential remains much more difficult for people of color in this country, especially African Americans.
A new report from the National Association of Realtors examined the rate of home ownership among different racial and ethnic groups, and what factors are contributing to the observed disparities across the country. According to the report, only 42% of black Americans are homeowners, while more than two-thirds of white Americans (69.8%) are homeowners. The black homeownership rate is also lower than the rates for Asian Americans (60.7%) and Hispanic Americans (48.1%). “Indicating the K-shaped economic recovery, more potential first-time home buyers, many of whom are minorities, are put off by the disproportionate loss of jobs,” said Lawrence Yun, chief economist. of the National Association of Realtors, in the report. “Basically, they are being discounted in the price of a home ownership due to the rapid rise in home prices as a result of historically low home inventory.” Nationally, only 42% of black households could afford to buy a typical home, the trade organization reported, although affordability varied widely from state to state. Less than a third of black households could afford to buy a home in states like California, Massachusetts, Nevada, and Utah, among others, for example. Other factors are also creating additional hurdles for African Americans on the path to home ownership beyond rising home prices. Black households were more than twice as likely to have student debt as white households, 43% versus 21%. Not only that, but the debt burden that black households have is higher: Median student loan debt for black households was $ 40,000, about $ 10,000 more than white households. And when it comes to the mortgage application process, African Americans were denied much more often than their white peers. The report noted that 10% of black mortgage applicants were denied a loan, compared to just 4% of white applicants. And black home buyers were more likely than buyers of other racial or ethnic backgrounds to say they faced stricter requirements during a real estate transaction because of their race. The National Association of Realtors argued in the report that some of the policies proposed by the Biden administration could alleviate the disparities seen in the country’s housing market. In particular, the trade group noted that Biden’s proposal for a first-time homebuyer tax credit of up to $ 15,000 could address these issues, though they also warned that the administration should take additional steps to ensure such a policy does not worsen. the shortage of housing inventory across the country.