Study underscores that factors not related to
income are keeping the Black-white homeownership gap wide
- Racial mortgage affordability gap shrunk by more than a third
since 2012
- Among all races, renting families able to afford a mortgage
dropped by nearly half from 2021 to 2022
- White households own homes at a 73% rate, while Black
households own at 44%, with over half of the top 50 metros showing
a gap of 30 points or more
SEATTLE, Feb. 23,
2024 /PRNewswire/ -- The gap between the share of
Black and white renting families that could comfortably afford a
mortgage payment shrunk significantly during the pandemic, a new
Zillow® report shows. Despite this progress, a notable
homeownership gap and disproportionate rate of mortgage
denials persists, suggesting that other barriers not related to
income are also impeding Black families' access to
homeownership.
In 2022, approximately 38.6% of 138 million U.S.
families1 were not homeowners, according to
the American Community Survey. Among those, more than 6.3 million
families were considered "income mortgage-ready,"2
meaning their income would allow for paying a typical mortgage
payment in their area without being cost burdened.
About 7.8% of Black non-home owning families were income-ready
for a mortgage, compared to 12.5% of white families — a gap of 4.7
percentage points. While significant, the gap shrunk by more than
one-third since 2012, when it stood at 7.9 percentage points.
"Despite the significant decline in mortgage affordability in
the past two years, millions of families who do not own their home
have the means to afford the largest share of a homeowner's cost —
the mortgage," said Zillow Senior Economist Orphe Divounguy. "While
some families may choose to rent, many are simply constrained. It's
crucial to recognize the existence of additional barriers beyond
monthly cost, including access to funds for a down payment and
closing costs — as well as other barriers that significantly
contribute to mortgage denials, like insufficient credit scores and
lack of access to credit. These barriers especially impact people
of color."
Still, among all races, the number of renting families able to
afford a mortgage dropped to 6.3 million in 2022 from 12.9 million
in 2021, as mortgage rates doubled. While higher mortgage rates and
higher prices affected everyone, the median family income of
renters rose more for Blacks than for whites since 2012. Regions
where Black family incomes rose most generally experienced a
greater decline in the racial mortgage readiness gap during the
2012 to 2022 period.
Detroit has the highest share
(13.3%) of Black renting families earning enough income to
comfortably afford a mortgage, followed by Memphis (12.8%), St.
Louis (12.0%), Houston
(11.6%) and Cleveland (11.2%).
While home values are relatively lower in those communities and
more Black families could afford the typical mortgage payment,
access to homeownership remains a challenge.
Racial disparities in home values, homeownership rates and
credit security
Even though the incomes of Black
renting families rose faster during the pandemic, significant
disparities persist in homeownership rates and home
values between Black and white Americans. Nationally, white
households owned homes at a much higher rate (73%) than Black
households (44%), and the gap exceeded 30 percentage points in more
than half of the country's 50 largest metros in 2022.
Compounding the issue, the typical home owned by a white family
is still worth far more than the typical home owned by a Black
family. Although there has been incremental progress in
narrowing the home value gap, it still exceeds 10 percentage points
in 42 of the top 50 metro areas.
Discriminatory lending practices and higher denial rates for
Black mortgage applicants, compounded by credit history issues,
also pose challenges to housing equity. In 2022, Black applicants
saw a 146% higher mortgage loan denial rate compared to white
applicants, potentially hindering future generational wealth
transfer. Credit history is the most common reason cited for these
denials.
Initiatives aimed at things like enhancing access to down
payment assistance and credit-building opportunities as well
as implementing reforms in zoning, together with efforts to
construct and preserve affordable housing in thriving communities,
are vital.
Housing Inequalities by Race
Top 50
metros
|
Share of Black
Families
That Can Afford the Typical
Mortgage
Without Cost Burden
(non owners)
|
Share of White
Families
That Can Afford the
Typical Mortgage
Without Cost Burden
(non owners)
|
Share of
Families
That Can Afford the
Typical Mortgage
Without Cost Burden
(overall; all races)
|
Typical Home
Value Gap:
White vs. Black
Households
(in percentage
points)
|
Homeownership
Gap:
White vs. Black
Households
(in percentage
points)
|
United
States
|
7.8 %
|
12.5 %
|
11.9 %
|
17.9 pp
|
28.9 pp
|
New York, NY
|
2.6 %
|
11.5 %
|
6.9 %
|
15.7 pp
|
33.0 pp
|
Los Angeles,
CA
|
1.1 %
|
4.2 %
|
2.1 %
|
30.8 pp
|
25.7 pp
|
Chicago, IL
|
8.3 %
|
21.9 %
|
16.3 %
|
39.4 pp
|
33.5 pp
|
Dallas, TX
|
6.5 %
|
13.5 %
|
10.6 %
|
22.5 pp
|
30.2 pp
|
Houston, TX
|
11.6 %
|
19.3 %
|
13.7 %
|
22.9 pp
|
29.2 pp
|
Washington,
DC
|
6.2 %
|
12.8 %
|
9.1 %
|
9.6 pp
|
19.1 pp
|
Philadelphia,
PA
|
7.3 %
|
15.2 %
|
12.8 %
|
28.3 pp
|
27.1 pp
|
Miami, FL
|
4.7 %
|
13.1 %
|
7.2 %
|
22.2 pp
|
27.2 pp
|
Atlanta, GA
|
8.1 %
|
12.0 %
|
10.1 %
|
17.7 pp
|
24.3 pp
|
Boston, MA
|
2.8 %
|
5.4 %
|
4.8 %
|
18.1 pp
|
31.3 pp
|
Phoenix, AZ
|
4.2 %
|
5.5 %
|
4.4 %
|
14.2 pp
|
33.7 pp
|
San Francisco,
CA
|
0.3 %
|
4.2 %
|
2.5 %
|
29.2 pp
|
29.2 pp
|
Riverside,
CA
|
4.4 %
|
3.8 %
|
3.5 %
|
1.2 pp
|
30.6 pp
|
Detroit, MI
|
13.3 %
|
19.6 %
|
18.6 %
|
45.4 pp
|
34.0 pp
|
Seattle, WA
|
2.3 %
|
4.5 %
|
4.5 %
|
16.7 pp
|
34.3 pp
|
Minneapolis,
MN
|
7.1 %
|
7.8 %
|
7.7 %
|
14.0 pp
|
46.0 pp
|
San Diego,
CA
|
1.7 %
|
2.1 %
|
1.8 %
|
24.4 pp
|
32.3 pp
|
Tampa, FL
|
5.4 %
|
10.6 %
|
9.2 %
|
11.3 pp
|
27.0 pp
|
Denver, CO
|
1.3 %
|
4.2 %
|
3.6 %
|
12.7 pp
|
26.0 pp
|
Baltimore,
MD
|
10.0 %
|
13.4 %
|
12.1 %
|
16.9 pp
|
30.8 pp
|
St. Louis,
MO
|
12.0 %
|
17.6 %
|
17.3 %
|
44.7 pp
|
32.9 pp
|
Orlando, FL
|
6.3 %
|
10.0 %
|
7.6 %
|
13.2 pp
|
24.4 pp
|
Charlotte,
NC
|
7.0 %
|
12.6 %
|
10.2 %
|
18.2 pp
|
31.5 pp
|
San Antonio,
TX
|
4.9 %
|
16.6 %
|
10.1 %
|
10.5 pp
|
28.0 pp
|
Portland, OR
|
2.8 %
|
3.1 %
|
3.1 %
|
3.7 pp
|
38.9 pp
|
Sacramento,
CA
|
2.1 %
|
3.8 %
|
3.2 %
|
5.8 pp
|
28.5 pp
|
Pittsburgh,
PA
|
10.9 %
|
20.1 %
|
19.7 %
|
26.6 pp
|
39.9 pp
|
Cincinnati,
OH
|
6.8 %
|
13.4 %
|
12.8 %
|
18.9 pp
|
39.5 pp
|
Austin, TX
|
6.4 %
|
6.3 %
|
5.5 %
|
22.0 pp
|
23.9 pp
|
Las Vegas,
NV
|
3.6 %
|
7.5 %
|
5.4 %
|
5.1 pp
|
34.0 pp
|
Kansas City,
MO
|
7.9 %
|
15.7 %
|
13.6 %
|
25.1 pp
|
32.5 pp
|
Columbus, OH
|
10.7 %
|
13.6 %
|
12.9 %
|
20.6 pp
|
36.2 pp
|
Indianapolis,
IN
|
9.9 %
|
16.4 %
|
14.6 %
|
9.4 pp
|
33.3 pp
|
Cleveland,
OH
|
11.2 %
|
23.8 %
|
19.1 %
|
40.6 pp
|
36.0 pp
|
San Jose, CA
|
0.0 %
|
3.5 %
|
1.9 %
|
17.6 pp
|
33.9 pp
|
Nashville,
TN
|
3.0 %
|
7.3 %
|
6.3 %
|
14.4 pp
|
27.6 pp
|
Virginia Beach,
VA
|
7.9 %
|
13.4 %
|
10.2 %
|
7.1 pp
|
27.9 pp
|
Providence,
RI
|
2.3 %
|
5.1 %
|
4.8 %
|
10.1 pp
|
26.0 pp
|
Jacksonville,
FL
|
9.5 %
|
9.9 %
|
9.9 %
|
21.1pp
|
27.2pp
|
Milwaukee,
WI
|
5.3 %
|
12.5 %
|
10.4 %
|
38.2 pp
|
43.9 pp
|
Oklahoma City,
OK
|
10.1 %
|
17.0 %
|
15.6 %
|
19.3 pp
|
33.9 pp
|
Raleigh, NC
|
3.5 %
|
8.1 %
|
6.6 %
|
15.5 pp
|
24.9 pp
|
Memphis, TN
|
12.8 %
|
20.8 %
|
16.2 %
|
32.7 pp
|
31.2 pp
|
Richmond, VA
|
9.0 %
|
12.1 %
|
12.2 %
|
13.0 pp
|
21.8 pp
|
Louisville,
KY
|
9.3 %
|
14.5 %
|
13.3 %
|
29.4 pp
|
38.1 pp
|
New Orleans,
LA
|
5.3 %
|
17.4 %
|
11.3 %
|
22.4 pp
|
26.4 pp
|
Salt Lake City,
UT
|
5.8 %
|
3.6 %
|
3.0 %
|
7.5 pp
|
45.0 pp
|
Hartford, CT
|
9.4 %
|
13.5 %
|
15.7 %
|
23.4 pp
|
32.5 pp
|
Buffalo, NY
|
9.5 %
|
14.1 %
|
13.4 %
|
41.5 pp
|
33.1 pp
|
Birmingham,
AL
|
9.9 %
|
11.1 %
|
11.5 %
|
46.4 pp
|
28.0 pp
|
About Zillow Group:
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Zillow affiliate.
1 For the purpose of this analysis,
"family" refers to a related group within a household, as
identified in the American Community Survey.
2 This assumes a family can only
afford a 3% down payment at the highest mortgage rate recorded each
year based on applications submitted to the Freddie Mac from
lenders across the country. A lower down payment implies higher
monthly mortgage payments, raising the threshold income needed to
be considered mortgage ready in this analysis.
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SOURCE Zillow