Disparity Between White, Black Homeowners as Great Today as 1968
More than 50 years have passed since the enactment of the Fair Housing Act, and yet the homeownership rate gap between white and black Americans is comparable to the gap at the time when the Act first passed.
This is according to speakers at the National Association of REALTORS® second-annual Policy Forum held in February, where data collected at the end of 2019 showed that the percentage of whites (73.7 percent) who owned homes was nearly 30 percentage points higher than the percentage of blacks who owned homes (44 percent) in the United States.
“In 2020, there is still a persistent gap in homeownership rates between whites, African Americans, Hispanic Americans and Asian Americans,” said Bryan Greene, NAR’s director of fair housing policy. “On one hand, you might expect there to be a lower homeownership rate among minority Americans, as a history of discrimination in this country has left many with lower incomes … and less generational wealth to pass on for down payments and the like.”
“I think many of us would have expected rates to have risen more. We did see that happen for a period from the early 90s to the early part of this century; but dramatically, at least for African Americans, we started to see that homeownership rate decline – so much so that last year the homeownership rate for African Americans dipped below the rate in 1968 when the Fair Housing Act was passed.”
Last year, NAR, The National Association of Real Estate Brokers and the Urban Institute held a joint roundtable discussion focused on this goal of bolstering African American homeownership rates.
A five-point framework that can be applied across all minority communities emerged from last year’s conversations and continues to be expanded upon in 2020 as the groups continue to work together to tackle the issue.
“The fact that homeownership rates for African Americans have regressed in spite of the presence of fair housing laws makes clear that various institutional challenges still must be faced and defeated,” said NAR President Vince Malta. “By strengthening post-purchase counseling, funding programs to prevent foreclosure for low- and moderate-income and vulnerable families of color, and building tools that help create early-warning displacement triggers, we can ensure first-time homebuyers have the knowledge and resources to remain homeowners for the rest of their lives.”
It is likely that ongoing discrimination in the real estate market also contributes to the ongoing homeownership gap. An investigation by New York Newsday published in November 2019 alleged that real estate companies responsible for 50% of the home sales on Long Island, discriminated against African-Americans, Hispanics, and Asian Americans in 40% of transactions, on average.
To address this ongoing problem, in January, the NAR Leadership Team unanimously passed a Fair Housing Action Plan called ACT, which stands for Accountability, Culture change, and Training.
ACT specifically commits NAR to:
- Promote minimum, core fair-housing training requirements for all states
- Promote state licensing laws that ensures real estate agents who violate fair housing laws are held accountable
- Launch a public-service announcement campaign that reaffirms NAR’s commitment to fair housing and tells consumers how to report problems
- Integrate fair housing into all Realtor conferences and engagements
- Explore the creation of a voluntary self-testing program in partnership with a fair housing organization that brokers and others can use as a resource. It would include confidential reports on agent practices so problems can be addressed
- Create robust fair housing education that includes implicit-bias training and education on how the Realtors’ actions shape communities
- Conduct a national study to determine what factors motivate discrimination in sales markets
- Profile leaders who exemplify fair housing practices and workplace diversity
- Develop materials that helps Realtors provide information on schools in a way that avoids fair housing pitfalls
“NAR has been active in our pursuit of innovative new policies and partnerships that will help us preserve the fundamental right of housing in America,” Malta said, upon the NAR leadership team’s approval of the ACT! initiative. “While we have long been a champion of the Fair Housing Act, recent incidents have underscored the progress our nation must still make. That’s why I am proud to announce that our association’s Leadership Team has voted today to approve an action that will directly ramp up and reinvigorate NAR’s fair housing commitment.”
NAR re-organized last summer to create a new Fair Housing Policy Committee to more effectively advocate on national fair housing policy and hired Bryan Greene as NAR director of fair housing policy. Greene previously served at HUD for 29 years as the top career official overseeing enforcement of the federal Fair Housing Act.
Despite the year-end numbers presented at the Policy Forum, there were some signs of optimism that showed that the worm may have turned and home ownership among minorities is trending in the right direction.
According to data from the housing website Zillow, the homeownership rate for black households jumped 3.4 percentage points over the second half of 2019, bringing it from a three-decade low to back near historic averages.
A closer look at the data also revealed that some metro areas across the U.S. had a black homeownership rate that was higher than other large metros with similarly sized African American populations.
Across the country, the black homeownership rate lags behind that of non-black households in each of the 45 largest metropolitan areas. However, it is now above the mid-decade average in more than half of those markets.
The biggest increases have been seen in Sacramento (7.8 percent), Phoenix (5.4), Orlando (5.3), San Francisco (4.4) and Portland (3.9).
And in some cases, the rate of growth in the black homeownership rate has exceeded that of all other households since mid-decade – which means the deficit is shrinking. That gap has been closed the most in Sacramento (6.5 percent), Orlando (4.1) and Cincinnati (3.2).
Metropolitan markets with a higher share of African American residents tend to have a higher homeownership rate.
Atlanta has the third highest share of African American residents of any market in the country and its black homeownership rate is 48.2 percent. Richmond, Va. ranks fifth in percentage of black residents and has a homeownership rate of 49.9 percent. Birmingham ranks seventh and has the highest home ownership rate of any major metro at 52.2 percent. Washington D.C. is second-best at 51.4 percent, and they rank eighth in the percentage share of black residents. [This needs to be explained Why aren’t the cities with the higher percentages of black homeowners ranked higher than those with lower percentage of black homeowners? Why is Atlanta higher than those that exceed 50%?]
Some of these metro markets are outperforming expectations when it comes to black homeownership. For example, of the top 45 markets, San Antonio ranks 37th in share of black residents, but its black homeownership rate of 42.9 percent ranks 14th. Orlando (6th highest homeownership rate, 24th in share of residents), Riverside, Calif. (15th and 35th, respectfully) and Sacramento (23rd and 39th, respectfully) also outperform.
The black homeownership rate has been like a roller coaster ride for the past 50 years. The rate of homeownership for black households rose from 41.6% in 1970 to a peak of 46.5% in 2007.
However, the recession followed, and homeowners of color suffered the most, with the homeownership rate falling below 1970 levels by 2016. The 44 percent homeownership rate in 2019 is an increase from that bottoming out at 41percent three years earlier, but it’s still below the 2007 rate.
But help is on the way in the way of an influx of $40 million in grant money provided recently by HUD to assist fair housing organizations efforts to ensure that fair housing protocols are being followed, to investigate potential claims and file more claims and continue the fight to finally end housing discrimination.
With these newly funded efforts and with continued education, there is hope that the black home ownership rate will exceed that 2007 peak in the not too distant future and continue to close that racial gap until it becomes inconsequential or is eliminated entirely.