The Black-white homeownership gap is no accident. Decades of intentional, government-sponsored exclusionary zoning, redlining, and predatory lending schemes have kept many Black people from buying and sustaining a home. At the same time, government policy and practice subsidized and protected white homeownership and wealth building. Though the Black homeownership rate climbed after the Fair Housing Act passed in 1968, the 2008 subprime mortgage crisis reversed these gains and worsened homeownership disparities.

When interest rates reached historic lows during the COVID-19 pandemic, more Black households bought homes. The Black homeownership rate increased 2 percentage points between 2019 and 2021 (from 42.2 to 44.2 percent), and the most recent data for 2022 indicate continued growth. But the gains are too modest to recover the Black homeownership losses following the Great Recession, let alone reduce the significant racial homeownership gap. Today, the Black homeownership rate is lower than it was in 2000 (44.3 versus 45.7 percent), and the Black-white homeownership gap is wider than it was when segregation was legal.

To help more Black families buy homes and reverse the ongoing barriers to homeownership they face because of past discriminatory actions, we need policies and programs intentionally focused on those goals. We must also understand and acknowledge the nation’s long history of using factors rooted in systemic and structural racism to determine a person’s access to a mortgage. In observance of Black History Month, we discuss the increasing obstacles to homeownership for Black families in a high-interest-rate environment and offer strategies to sustainably increase Black homeownership.

  • Mortgage applications from Black families are decreasing, and their mortgage denial rates are increasing
  • Many Black households lack sufficient wealth to afford increasing down payment amounts

Targeted programs could help more Black families become homeowners

The racial homeownership gap remains wide, and policymakers, government agencies, financial institutions, and other changemakers in the mortgage market must all work together to significantly increase Black homeownership. The US government afforded low-interest, amortized home loans to millions of white households for decades. Similarly, programs intentionally targeted to Black families and other historically excluded groups, who still face the effects of past discriminatory housing policies and practices, could help more such families access homeownership’s benefits.

Special purpose credit programs (SPCPs) and first-generation down payment assistance programs are gaining traction and could reduce racial homeownership gaps. SPCPs are targeted programs through which lenders can legally extend credit on more favorable terms to groups who have been historically disadvantaged by discriminatory policies, such as by lowering down payment requirements or loosening credit requirements. Greater adoption of SPCPs, continued liquidity support from the secondary mortgage market, and strategic targeting of these programs could help Black mortgage applicants who have been denied mortgages because of systemic barriers receive sustainable credit and become homeowners.

Read the full article about racial home ownership gap by Jung Hyun Choi, Amalie Zinn, and Aniket Mehrotra at Urban Institute.