Dec 15, 2021 - News

Black homeownership is declining in Philly

Red brick row houses of Philadelphia. Photo: Joe Sohm/Getty Images

Philadelphia's Black homeownership rate has been declining over the past 30 years, and little progress has been made to narrow the gap, according to a new report.

Why it matters: The country's long history of discriminatory policies have disadvantaged Black residents from building wealth through homeownership at the same rate as their white counterparts.

State of play: About 47% of Black Philadelphians owned their homes in 2019, compared to 59% of their white peers, according to the Fed's new report published this month.

  • Declining household incomes, rising home prices, low credit scores and limited credit history all contribute to the gap.
  • Lenders cited credit history as a reason for denying 29% of rejected Black applicants and just 16% of rejected white applicants.

Flashback: The city's population dwindled in the 1960s because of suburbanization and "white flight," resulting in more housing supply. That pushed down prices, causing more working-class families to pursue homeownership.

  • From the 1960s to the 1990s, the mixture of lower housing costs and fair housing laws allowed for more middle and upper-class Black families to buy homes.
  • But when the U.S. housing market crashed in 2007, Black homeowners — who were more likely to have subprime mortgages — were disproportionately affected. Many majority Black neighborhoods in the city saw a large spike in foreclosures.

Catch up fast: After 2010, the Black homeownership rate in Philadelphia fell below 50% — the first time since 1970. It has continued to decline since.

  • Over the past 20 years, the median home value in the city has jumped from 2.5 to 5 times the median income for Black households.

What they're saying: Lei Ding, a co-author of the new Fed report, suggested allowing lenders to factor in alternative metrics like rental or utility payments so that Black borrowers can access more loans.

  • "This wouldn't be a comprehensive solution, but it could help," Ding said.

Theresa Singleton, who also co-authored the report, said the issue should be viewed as an intersection between jobs, income and housing.

  • "We need to be reminded that this is not just a credit issue," she said.

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