Image credit: Rido.
September 18, 2024
By Tony Bodulovic
For many households, owning a home is both a means of wealth creation and a source of stability. However, residents of color face systemic challenges in attaining homeownership. These obstacles are deeply rooted in a long history of racist housing practices, including predatory lending, racial steering, and redlining. Even today, households of color continue to face bias and lag behind white households in income, wealth, and credit. These disparities are especially acute for Black households.
Throughout this blogpost, we use data collected by the U.S. Census Bureau and adopt the race and ethnicity terms used in the American Community Survey. However, we acknowledge that these categories are imperfect, and do not reflect the complexity of individual identities. The data structure also prevents us from disaggregating the data for Black and Asian householders by Hispanic ethnicity; therefore, some double counting may occur.
Figure 1. Homeownership Rates by Race (2022)
Sources: American Community Survey (2022) via IPUMS USA, NYU Furman Center
Gaps in homeownership vary widely by locality, region, and even city size. In an earlier analysis, we found that the Black-white homeownership gap was 8.1 percentage points higher in small and midsize cities than in large cities. Dramatic shifts in population, housing preferences, and lending opportunities throughout the COVID-19 pandemic also impacted these disparities.
In this analysis, we examine homeownership trends by race and ethnicity between 2012 and 2022, as well as disparities in home repair needs, which are a potential driver of unequal homeownership loss.
This research suggests opportunities for cities to ensure that households of color can not only own their homes but also stay in them.
Between 2012 and 2022, homeownership rates increased for Asian and Hispanic households but declined by nearly two percentage points for Black households.
In the past decade, homeownership rates among households of color did not follow the same trends. For Asian households, the homeownership rate increased by over three percentage points. Hispanic households also experienced a modest increase of 1.65 percentage points. The homeownership rate for Black households, on the other hand, decreased by nearly two percentage points over the same period. This decline is notable, as the homeownership rate for Black households was already the lowest among all racial and ethnic groups in 2012.
Figure 2. Percentage Point Change in Homeownership Rates by Race (2012 - 2022)
Sources: American Community Survey (2008-2012, 2018-2022) via IPUMS USA, NYU Furman Center
Yet this decline in Black homeownership has been uneven and sharper in some cities than others. In Temple, TX, for example, the Black homeownership rate decreased by 8.8 percentage points between 2012 and 2022. But just 30 miles to the north in Waco, TX, the Black homeownership rate increased by 2.6 percentage points over the same period. These diverging trends reveal how local conditions, from zoning rules to population shifts to changes in housing supply, can either temper or exacerbate barriers to Black homeownership.
Figure 3. Percentage Point Change in Black Homeownership Rates in Texas (2012 - 2022)
Sources: American Community Survey (2008-2012, 2018-2022) via IPUMS USA, NYU Furman Center
During this period, Asian and Hispanic households in the Midwest saw the greatest increases in homeownership, whereas Black households in the region experienced the most significant declines.
Homeownership rates also differ by region. Between 2012 and 2022, Asian and Hispanic households experienced the greatest increase in homeownership in the Midwest, at roughly three percentage points. However, the Black homeownership rate in the Midwest declined by nearly three percentage points over the same period, the steepest drop of any region.
Figure 4. Percentage Point Change in Midwest Homeownership Rates (2012 - 2022)
Sources: American Community Survey (2008-2012, 2018-2022) via IPUMS USA, NYU Furman Center
Diverging outcomes between households of color may speak to differences in migration patterns. For example, in the face of pollution and poor economic prospects, many Black residents have departed former industrial hubs like St. Louis, MO, for Southern cities. Asian and Hispanic households, on the other hand, may be drawn to the Midwest for its relatively affordable homes or other reasons.
Given these trends, the map below highlights population shifts and changes in Black homeownership in various localities across the country.
Figure 5. Percentage Point Change in Black Homeownership Rates Across the U.S. (2012 - 2022)
Sources: American Community Survey (2008-2012, 2018-2022) via IPUMS USA, NYU Furman Center
Over the course of the pandemic, homeownership rates increased for all racial and ethnic groups.
The COVID-19 pandemic brought about new challenges for all households. Initially, economic instability, displacement pressures, and surging home prices created additional barriers to homeownership. However, by 2022, households of color across the board saw increases in homeownership during this period.
Figure 6. Percentage Point Change in Homeownership Rates by Race (2019 - 2022)
Sources: American Community Survey (2019, 2022) via IPUMS USA, NYU Furman Center
When examining changes in household income from 2019 to 2022, we found that all rental households experienced declines during the pandemic. While these drops differed in absolute terms, Black and white rental households saw the greatest relative income decrease. Therefore, it is unlikely that changes in income precipitated an increase in homeownership. Rather, these increases are likely attributable to a shifting borrowing landscape, as record-low interest rates were especially beneficial for new homeowners.
Figure 7. Change in Median Renter Household Income (2022$) by Race (2019 - 2022)
Sources: IPUMS USA (2019, 2022), University of Minnesota, NYU Furman Center
Note: Median household incomes from 2019 have been adjusted for inflation on a regional basis
Even with these modest increases, the racial homeownership gap remains wide: as of 2022, white households were nearly twice as likely to own their homes than Black households. It also remains unclear whether pandemic-era homeownership increases are sustainable, or if they have faded since 2022.
Hispanic and Black homeowners are more likely to reside in homes of lower quality.
Buying a home is only part of the challenge. Households of color may also be limited to lower quality homes or unable to afford repairs, making them more likely to reside in homes that are either moderately or severely inadequate for living. This need is especially great for Black and Hispanic households, who live in homes with the greatest incidence of roof, mold, and heat problems. Mold is a particularly challenging issue due to relatively few policy interventions, according to those that administer home repair programs.
Low housing quality is associated with housing instability and poses a risk to existing homeowners of color. For example, Black homeowners are significantly more likely to become renters than white homeowners. Consequently, efforts to increase homeownership rates among households of color must also ensure equitable access to home repair opportunities to help homeowners of color sustain homeownership.
Figure 8. Share of Moderately and Severely Inadequate Homes by Race (2021)
Sources: American Housing Survey National File (2021), NYU Furman Center
Takeaways
The impact of discriminatory housing policies, including redlining, segregation, and racially restrictive covenants, continues to drive disparities between households and affect access to housing opportunities. Ongoing practices like racial steering further compound these disparities for households of color, especially with regard to homeownership.
Yet homeownership trends for households of color are not monolithic. While Asian and Hispanic households have seen modest growth in homeownership over the last decade, Black households experienced a decline of two percentage points. The largest declines were in the Midwest, but the extent of the declines varies greatly by location. This diversity emphasizes the importance of housing policies that are suited to the unique needs of different communities, both at the national and local levels.
While the pandemic represented a paradigm shift for Black homeownership, it is unclear whether these gains have faded since 2022. Since record-low interest rates likely enabled many Black households to purchase a home during this period, it is critical that localities continue to facilitate access to credit and provide additional financial support when possible. Localities should also work to prevent ownership loss among homeowners of color through initiatives like home repair programs, which can address roof, mold, and heating problems that disproportionately affect them.
