Finance

US homeownership hits record high, but rate among Black Americans lower than a decade ago: analysis

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The homeownership rate for Black Americans in 2020 was lower than it was a decade before, even as the nation’s overall homeownership rate saw a record annual increase, a new report has found.

A report released by the National Association of Realtors (NAR) earlier this week found the U.S. homeownership rate rose by 1.3 percent from 2019 to 2020, reaching 65.5 percent overall – a jump the group called “the largest annual increase on record.”

But the new report also shines a somber light on the racial disparities behind those figures.

The report shows that the homeownership rate for Black Americans hit 43.4 percent that year, compared to 44.2 a decade before. By contrast, the homeownership rate for White Americans and Asian Americans jumped in the same period, rising to 72.1 percent and 61.7 percent, respectively.

Hispanic Americans also saw a boost in homeownership in 2020, rising to 51.1, which the group noted was a record high for the bloc, marking the first time the rate surpassed 50 percent.

“As the gap in homeownership rates for Black and White Americans has widened, it is important to understand the unique challenges that minority home buyers face,” Jessica Lautz, NAR vice president of demographics and behavioral insights, said in a statement. 

“Housing affordability and low inventory has made it even more challenging for all buyers to enter into homeownership, but even more so for Black Americans,” she continued.

In the current housing market, the report notes that roughly half of homes on sale “are affordable to households with at least $100,000 income.”

According to the report, almost half of Asian households in the country earn more that amount annually, compared to 35 percent of White households, a quarter of Hispanic households and a fifth of Black households.

Half of Black households were also found to put more than 30 percent of their income toward rent on a monthly basis, while 28 percent were found to spend more than 50 percent of their monthly income on rent, compared to 20 percent of White renter households who pay the same, the report said.

“Black households not only spend a bigger portion of their income on rent, but they are also more likely to hold student debt and have higher balances,” Lautz noted. “This makes it difficult for Black households to save for a down payment and as a result, they often use their 401(k) or retirement savings to enter homeownership.”

Black households were found to carry a disproportionate burden of student debt compared to other households in the report, which can potentially make it harder for would-be home buyers to save for a down payment, the report noted. Black households were found to be more than twice as likely to have student loan debt than Asian households and almost twice as likely as White households.

Fourteen percent of Black Americans were likely to use 401(k) or pension funds for a down payment, compared to 12 percent of Hispanic Americans and 6 percent of White Americans, the report added, a move it said can also serve to “diminish future wealth growth.”

The report also noted that, of surveyed results from respondents that said they “witnessed or experienced discrimination in a real estate transaction, nearly a third of Black respondents, 32 percent, said they faced stricter requirements because of their race,” compared to “19% of White respondents, 16 percent of Hispanic respondents and 4 percent of Asian respondents.”

“Approximately one-third of Black and White home buyers (32 percent each) and almost a quarter of Hispanic home buyers (23 percent) said they witnessed or experienced discrimination with the type of loan product offered,” the report also stated.

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