Households of color often experience worse homeownership outcomes because of structural barriers, such as systemic discrimination in employment and mortgage underwriting, that reduce their ability to purchase a home, increase the likelihood of entering foreclosure, and contribute to persistently worse disparities over time.

Although inequities by race and ethnicity are persistent, we have demonstrated in past research that economic downturns can lead to even worse outcomes for people or households of color. In our most recent report, we illustrate how the structural barriers that affect households of color combined with an economic downturn would likely result in higher foreclosure rates across the city of Newark, relative to the state of New Jersey, absent federal forbearance policies and foreclosure moratoriums. These results reflect the short-term impacts recessions can have on already disadvantaged neighborhoods.

But the trend of mortgage delinquencies in Newark, as compared with the US overall, suggests that recessions can also have disparate long-term outcomes. In other words, uneven recoveries over successive economic recessions can contribute to persistent inequity by race and ethnicity.

To avoid these cyclical disparities from becoming more deeply entrenched, policymakers can focus on stabilization policies that help households in need. The Homeowner Assistance Fund (HAF), which targets low-income homeowners and homeowners of color, can help ensure these households and the places they live can fully recover from the COVID-19 economic catastrophe.

Read the full article about disparities in housing by Daniel Pang and Michael Neal at Urban Institute.