Resource Category: Housing and Homeownership

Homeownership provides families with a stable place to live and, due to preferential policy treatment in the U.S. context, homeownership is also a core vehicle for wealth accumulation. However, the long history of discriminatory housing policies, including redlining, racial covenants, steering, exclusionary zoning, and predatory lending, have led to stark racial disparities in homeownership and, consequently, wealth.

Why Housing & Homeownership Matters

Homeownership provides economic security and is a core vehicle for household wealth accumulation. It imparts families not only with a stable place to live, but also tax benefits and, often, protection from rising rents. For most low and moderate income households, their home is also their largest source of non-retirement wealth.

However, the long history of discriminatory housing policies, including redlining, racial covenants, steering, exclusionary zoning, and predatory lending, have led to stark racial disparities in homeownership rates. Because of this, increasing homeownership for Black and other communities of color is viewed as a core strategy for closing the distance in racial wealth holdings between racial groups.

There is also evidence that homeownership is a less-effective tool for wealth accumulation for Black families due to ongoing patterns of discrimination. Black homeowners, for instance, have their homes appraised at lower values than White families and are often subject to paying higher insurance rates.

Strategies for closing racial homeownership gaps include things like subsidized mortgage products and down payment assistance programs. Longer-term strategies also include anything that increases the supply of lower-cost starter homes.

In a high-cost, low-supply housing market, like Greater Boston, there is ongoing debate about how these sorts of long-term and short-term housing strategies should be prioritized.

Resource Summaries

Report November 2024

From Rent to Riches? A Profile on the Wealth and Financial Well-Being of Renter Households

By Steven Brown, Shehryar Nabi

While homeownership is an important tool for building wealth, researchers at the Aspen Institute argue that the country’s 45 million renters need additional options.

“Whether or not they ever become homeowners, renters still need alternative and additional options to grow their savings and wealth over time, across each stage of their adult lives.”

The wealth gap between owners and renters is substantial. Renters have “less than 3 percent of the wealth of homeowners,” a median net worth of $10,400, far less than homeowners’ $400,000.

While homeownership is an important tool for building wealth, researchers at the Aspen Institute argue that the country’s 45 million renters need additional options.

“Whether or not they ever become homeowners, renters still need alternative and additional options to grow their savings and wealth over time, across each stage of their adult lives.”

The wealth gap between owners and renters is substantial. Renters have “less than 3 percent of the wealth of homeowners,” a median net worth of $10,400, far less than homeowners’ $400,000.

There are, the report says, three policy pathways for advancing the wealth and financial well-being of renters:

Address high rent costs and limited cash flow with strategies that raise wages, provide rental assistance, increase the supply of affordable rental housing, and expand ways to protect renters from harmful debt.
Increase renters’ access to a “broader portfolio of assets,” including cash and retirement savings and shared ownership of real estate.
Smooth the pathway to homeownership by expanding down payment assistance programs and boosting the supply of starter homes.

Building renter wealth could increase their financial resilience, quality of life, and future economic and wealth-building opportunities.

Read on Aspen Institute

Report September 2024

Can Increasing Housing Supply Advance Racial Equity in Homeownership?

By Michael Neal, Marokey Sawo, Chitra Balakrishnan, Aashna Lal

Compared to white households, Black and Hispanic households are more likely to rent their homes than own them. Urban suggests that one step toward closing this home ownership gap—and, in turn, closing the racial wealth gap—is to increase the supply of houses that are for sale.

However, while increasing for-sale inventory does correspond with higher homeownership rates, this increase alone doesn’t close the racial gap in homeownership. That’s because Black and Hispanic households face additional barriers to buying homes.

To address these barriers, the report says, it’s essential to focus on policies that “increase income, expand access to capital, and help potential homebuyers build credit” so they are better prepared for homeownership.

Read on Urban Institute

Article January 2024

Black wealth is increasing, but so is the racial wealth gap

By Andre M. Perry, Hannah Stephens and Manann Donoghoe

Recent data from the Survey of Consumer finances suggests that there were large wealth gains across the pandemic for all groups, as highlighted in 9 Key Findings About Wealth in 2022. That doesn’t mean there aren’t important caveats to these data however, as Brookings explores in this piece centered on the growing difference in wealth between Black and White households. In real-dollar terms, this gap grew from just over $191,000 in 2019 to around $240,000 in 2022 – the largest wealth gap we’ve seen in over a decade. The authors tease this out in several different ways, exploring the role that income, business ownership, government transfers (such as social security or stimulus payments), housing equity, and stocks play in mitigating or expanding this gap.

Notably, Brookings finds that “housing equity drove increases in Black wealth…” but with many fewer Black households owning their own home – just 44 percent nationally – wealth growth was limited in the aggregate. By contrast, while White households also saw housing equity growth, White wealth grew more thanks to the appreciation of financial assets. The examination of investments, though limited in this Brookings piece, is an analytical thread that sees some expansion in a couple other recent pieces, such as “The Rising Importance of Stock-Linked Assets in the Black-White Wealth Gap.”

Read on Brookings

Resource Category: Housing and Homeownership

Why Housing & Homeownership Matters

Resource Summaries

From Rent to Riches? A Profile on the Wealth and Financial Well-Being of Renter Households

Can Increasing Housing Supply Advance Racial Equity in Homeownership?

Black wealth is increasing, but so is the racial wealth gap

More On This Topic

Racial and Ethnic Wealth Inequality in the Post‑Pandemic Era

Implications of Housing Conditions for Racial Wealth and Health Disparities

Black Immigrant Homeownership: National Trends and the Case of Metro Boston

Mortgage Prepayment, Race, and Monetary Policy

2022 Housing Underproduction in the U.S.

The Essential Role of Down Payment Assistance in Closing America’s Racial Homeownership and Wealth Gaps

Building Black Homeownership Bridges: A Five-Point Framework for Reducing the Racial Homeownership Gap Summary

Homeownership and the American Dream

Socioeconomic and racial disparities in the financial returns to homeownership

The devaluation of assets in Black neighborhoods