The State of Homeownership in Black America
Source: 2020 State of Housing in Black America (SHIBA) report
In honor of Black History Month, we wanted to shed some light on the state of Black homeownership in America today and moving into 2021. This blog post offers a snapshot into the facts, figures as well as the opportunities for Black homeownership that have been pulled from the 2020 State of Housing in Black America (SHIBA) report, commissioned by The National Association of Real Estate Brokers. The full report can be downloaded here.
Against the backdrop of popular culture, policymakers and scholars have emphasized homeownership as one aspect of the ‘American Dream.’ Despite this, it is no secret that minority families, particularly Black families, have experienced structural inequalities and cumulative disadvantages, preventing them from accessing and securing stable housing.
“Because of cumulative disadvantages, Blacks accrue fewer benefits of higher earnings, education, and homeownership than do Whites. Simply put, the effects of discrimination and inequality-- in housing, education, employment, health care, the justice system, and other institutions-- suppress access to and the accumulation of wealth. These intergenerational problems get passed down to new generations of Black Americans, which means that even with higher levels of educational attainment, employment opportunities, and access to economic and social capital because they started at a deficit, it is difficult if not impossible to catch up to similarly-situated others.”
COVID-19
With the onset of COVID-19 in early 2020, the lives and economic viability of Black Americans were thrown into uncertainty. When there were already disparities in access to healthcare amongst Black Americans, COVID-19 created an environment where they were the most at risk of becoming hospitalized. In June 2020, Black people were 5 times more likely to be hospitalized than non-Hispanic White persons. This has been exacerbated by the fact that Black Workers are more likely to work in ‘front-line’ jobs, like in public transit, childcare, healthcare, and social services that carry a higher risk of infection. This has led to high rates of job and income-loss, which has then directly affected 8.5 percent of Black borrowers reporting having had no confidence in their ability to pay their mortgage compared to 2.8 percent of White borrowers.
Black homeownership rates
To put the Black-White homeownership gap further into perspective, in 2020 the gap was at an all-time high at 26 percentage points, less than one percent difference between the 26.8 percentage point gap in 1960, prior to the passage of the 1968 Fair Housing Act. See Figure 1.3 from the SHIBA report.
Where do Black homeowners live?
The majority of Black Americans are concentrated in 20 Metropolitan Statistical Areas (MSAs). The Dallas-Fort Worth and Arlington area makes the list. See Table 1-1 from the SHIBA report.
Note the Housing Opportunity Index 2020 Q1 in the last column. This is a measure of the share of homes sold in an area that would be affordable for those earning the local median income.
Are Black Americans being priced out of these Metropolitan areas? While redlining and racial segregation have contributed greatly to the problem, income-segregation has also increased.
Home values for Black Americans
Considerable evidence has shown that overall homes tend to have lower value in predominantly Black neighborhoods than in neighborhoods with lower minority concentrations. This is just as true for new homebuyers as for all other homeowners. What’s more, research also suggests that as more minority residents move into the neighborhood, housing appreciation also tends to decline. See Table 1-2 from the 2020 SHIBA report.
Opportunities for the market: mortgage applications
In 2019, Black homebuyers accounted for $113 billion in home purchases. What does this mean for real estate professionals? A potential of $6.8 billion in real estate commissions for real estate professionals, working specifically with Black Americans. The fact that 690,000 mortgage loans were either rejected, incomplete or withdrawn in 2018 and 2019 suggests that Black Americans are not being met halfway. Real estate professionals who conduct business in the South should especially take note of the number of originations of mortgage applications occurring there. See Figure 1-16 from the SHIBA report.
Opportunities for the market: Black Millennials in metro areas
Despite lower homeownership rates than previous generations, 89 percent of Black Millennials report their intentions of becoming homeowners eventually. See the concentration of Black Millennials by metropolitan area in Figure 1-17 from the SHIBA report. Dallas-Fort Worth and Arlington are amongst the metropolitan areas with high concentrations of Black Millennials.
These are just a few of the highlights from the 2020 State of Homeownership in Black America report. Read the full report here.
Black Americans, if you live in the Dallas-Fort Worth and Arlington metropolitan area, come see what Housing Channel has to offer you in terms of affordable housing, options for down payment assistance and financial wellness counseling.
Is one of the barriers to homeownership an inability to pay your rent because of job or income loss due to COVID-19? You are not alone.
Housing Channel may be able to help your situation.
Fill-out and submit our rental assistance application on our homepage. If you are currently a homeowner and struggling with your mortgage payments, we have some options for you as well.