According to a new report from Zillow, the Black homeownership rate grew about one percentage point between early 2019 and early 2020, while the white homeownership rate stayed flat.
Black-owned home values have also grown just over one percentage point faster than white-owned home values each year for the last three years.
In February 2020, for example, Black-owned home values were up 4.6% from a year earlier, while white home values were up 3.6%. In February 2021, Black home values were up 10.9% from the previous year, while white home values were up 9.7%. This faster appreciation among Black-owned homes narrowed the overall home value gap from 16.7% to 15.9%.
Black Homeownership and the Wealth Gap
Today’s typical Black household has only about 23% of the wealth of a typical white household, down from 34.6% before the Great Recession. Housing factors — including lower home values and rates of homeownership — directly account for nearly 40% of that gap, with assets like investments in stocks and bonds and retirement accounts making up the rest.
But incremental increases in homeownership rates and home values among Black households would help shrink the current $3 trillion racial wealth gap by hundreds of billions of dollars over the next decade.
“Housing will be a prominent factor determining the course of the racial wealth gap over the next decade,” says Zillow economist Treh Manhertz. “The issues caused by historic discrimination won’t be solved quickly, but addressing things like increasing access to credit, more-equitable lending standards and reducing exclusionary zoning could make buying more accessible and bring significant strides toward closing the wealth gap. In the most optimistic scenario, Black millennials could see housing equality in their retirement, and finally pass on some real wealth to the next generation.”
About 42% of Black households own their home, compared to 72% of white households, and Black-owned homes are typically worth about 18% less than white-owned homes. Zillow estimates that if Black homeownership rates and home values rose to match those of their white counterparts, Black wealth would more than double (from $931 billion to $2.1 trillion).
For the full report and analysis from Zillow, click here.