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

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

Summary January 2023

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

By Sharon Cornelissen, Daniel McCue, Raheem Hanifa

This report dives into homeownership trends among Black immigrant households, particularly highlighting the role of new immigrant clusters in Greater Boston suburbs. The authors make the case that because of the rapidly growing Black immigrant populations in specific regions of the U.S., including Massachusetts, policymakers focusing on Black homeownership need to expand efforts to account for the distinct challenges and opportunities that Black immigrants face to homeownership.

The authors find that homeownership rates are similar between Black immigrant households and native-born Black households, but rates vary greatly across specific Black immigrant groups due to factors like country of origin, context of immigration, age of homebuyer, and geographic location.

Notably, suburban communities are where more Black immigrant households own homes than any other geographic location nationally, and this trend holds true for metro Boston.

Massachusetts also has one of the fastest growing Black immigrant diasporas in the country, with immigrants from countries including Cape Verde, Haiti, and the Dominican Republic gravitating towards a small cluster of suburban communities and cities outside Boston. The authors point out that on one hand, these emerging suburban immigrant enclaves can offer unique resources and services to meet the needs of the specific diaspora of people who settle there, but on the other hand, this pattern may also indicate blocked opportunity from homeownership for Black immigrants in other parts of metro Boston.

Read on Joint Center for House Studies of Harvard University

Summary April 2021

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

By Michael Stegman, Mike Loftin

In this Urban Institute brief, the researchers argue for the creation of a national down payment assistance program focused on low-income homebuyers and homebuyers of color. They argue that closing the racial homeownership rate could not only help close the racial wealth gap, but it can also have a positive impact on the economy overall by creating thousands of new jobs and additional tax revenue.

Because households of color tend to have lower incomes and are less likely to inherit wealth or receive financial support from relatives, down payment assistance programs could help up to 1.7 million “mortgage-ready Black renters” nationally who could otherwise afford monthly mortgage payments but require assistance overcoming the initial cash hurdle of a down payment.

Researchers also find that down payment assistance (DPA) programs in the United States have been “scattershot,” supporting a limited number of families, at best — and supporting predatory lending, at worst.

Since the Great Recession, down payment assistance programs have become more mainstream, with many new state and local programs emerging. The authors caution that, with rising prices and extreme supply constraints, there is a risk that DPA would be capitalized into higher home prices, mitigating its effectiveness. But they believe that the potential benefits of an expansive, yet highly targeted, program outweigh those risks.

Read on URBAN Institute

Resource Category: Housing and Homeownership

Why Housing & Homeownership Matters

Resource Summaries

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

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

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

More On This Topic

Racial and Ethnic Wealth Inequality in the Post‑Pandemic Era

Implications of Housing Conditions for Racial Wealth and Health Disparities

Mortgage Prepayment, Race, and Monetary Policy

2022 Housing Underproduction in the U.S.

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