Feb 17, 2021 - Economy

The stark racial gap in homeownership

Reproduced from the National Association of Realtors; Chart: Axios Visuals

The homeownership rate for Black families is nearly 30 percentage points lower than that for white families, according to a new data analysis by the National Association of Realtors, which examined trends between racial groups from 2009 to 2019.

Why it matters: The report comes as President Biden has signed an executive order on racial inequity, directing his administration to take steps toward eliminating "racial bias and other forms of discrimination in all stages of home-buying and renting."

By the numbers: The homeownership rate for Black Americans is 42%, compared to white, Asian and Hispanic Americans who own homes at rates of 69.8%, 60.7% and 48.1%, respectively.

  • Just 43% of Black households can afford to buy the typical home compared to 63% of white households, according to the study.
  • Black Americans were the only group that saw a decline in homeownership rates from 2009 to 2019, and were "the group most affected by declines in homeownership rates before, during and after the Great Recession," the report says.

Driving the news: Black applicants were rejected for mortgages 2.5 times more than white applicants. The report highlights debt-to-income ratio as the most frequent reason lenders declined to approve loans to Black applicants.

  • Black applicants are twice as likely to be saddled with student debt than white applicants, with Black households having a median student loan debt of $40,000, compared to $30,000 for white households.
  • Low credit scores, unverified income, too little money in reserves and insufficient down payments are also listed as reasons lenders declined home loans to Black applicants.
  • Black and Hispanic applicants were three and two times more likely, respectively, than white and Asian Americans to tap into their 401(k) or pensions as a down payment for a home.
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