Giving Compass’ Take:
• Jung Hyun Choi and Laurie Goodman, in an article for Urban Institute, outline cyclical causes of the homeownership gap between black college graduates and white dropouts.
• Typically, we consider those with a college degree poised for greater economic success. Why is this homeownership gap so eye-opening, and what can we do to increase awareness towards this issue?
• Learn more about the reproduction of wealth inequalities for black Americans.
Our research on the 30 percentage point gap between Black and white homeownership rates has revealed a concerning finding: Black college graduates have significantly lower homeownership rates than white college graduates and slightly lower rates than white households without a high school diploma.
This gap exists partially because Black households are generally younger than white households. But a closer look at the data reveals four additional reasons young, college-educated Black households have lower homeownership rates than white households who are similarly or less educated:
- Single women make up a larger share of young, college-educated Black households than white college-educated households and households without a high school diploma. Their single incomes, combined with the gender pay gap, make homeownership harder to achieve.
- Young Black college graduates have lower FICO scores than young white households without a high school diploma. Lower credit scores are a disadvantage when applying for a mortgage.
- Young Black college graduates have higher incomes but much greater debt than white households without a high school diploma, making their debt-to-income ratios higher and creating an additional barrier to qualifying for a mortgage.
- The parental wealth and homeownership rates of college-educated, young Black households is significantly lower than that of college-educated, young white households, and parental support significantly increases the likelihood of owning a home.
As we research how the growing gap in Black homeownership threatens to exacerbate racial inequality for decades to come, these new findings shed light on what stands in the way of homeownership for young, college-educated Black Americans. Policymakers can use this information to develop effective solutions to help this population.
Read the full article about the homeownership gap for black college graduates by Jung Hyun Choi and Laurie Goodman at Urban Institute.
Interested in learning more about Race and Ethnicity? Other readers at Giving Compass found the following articles helpful for impact giving related to Race and Ethnicity.
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