Owning a home is a tool for building wealth and stability, but a report from researchers at the Urban Institute indicates that is less applicable to people of color.

Not only do Black Americans face more barriers to homeownership, but they also accrue less wealth than their White counterparts when they become homeowners. And the pandemic could intensify inequality, the study showed.

“Wealth is not accruing equitably to Black homeowners due to a long history of structural barriers and added costs,” said Alanna McCargo, VP of Housing Finance Policy at the Institute, who co-authored the report with Research Associate Junh Hyun Choi. “Households with little to no wealth are far more vulnerable during economic cycles, and the COVID-19 pandemic threatens to widen racial homeownership and wealth gaps creating deep housing insecurity for households of color.”

Growing Wealth Disparity
Wealth disparities between Black, Hispanic, and white households are greater than income disparities, the researchers said, pointing to data from 2019.

Last year, Black median household income was $43,862; Hispanic median income was $55,658; and White median income was $71,644. In contrast, in 2019, the median Black household held one-eighth the wealth of the median White household, the study found.

Furthermore, the researchers found evidence that homeownership plays a bigger role in creating wealth for Black families than it does for White families.

“Housing equity makes up nearly 60% of the total net worth for Black homeowners, compared with 43% of the total net worth for white homeowners. Although homeownership should not be the only focus of public policy and wealth building for Black households, it is a a solid foundation for building wealth, even with total wealth accumulation being less when compared with accumulation for White homeowner,” the authors wrote.

Lagging Homebuying 

The study also showed that the homeownership rate over time has significantly slowed for Black Americans, falling more than 5 percentage points after the Great Recession. In 2018, the Black-White homeownership gap reached 30.5 percentage points, its highest level in 50 years and a 4.1 percentage-point increase since 1960.

“Black homeownership declined the most following the 2008 housing market crisis and only started to recover in 2019, just before the pandemic hit,” the researchers say.

They go on to show how historic and existing policies have interfered with wealth-building (related to real estate ownership) for Black families.

“Black homebuyers also face more expensive mortgage financing because loan underwriters believe black homebuyers pose a higher risk of loan default … During the housing boom in the early 2000s, Black borrowers were significantly more likely to receive subprime loans and adverse pricing within the subprime space than comparable white households …” the research showed. “Subprime loans were more likely to experience foreclosure and increase foreclosure probability of nearby homes, resulting in substantial loss of wealth and deterioration of credit among Black homeowners.”

The study also takes a look at residential segregation, the Fair Housing Act, tight credit, lack of affordable housing, the “Black Tax,” as well as pandemic-related obstacles between Black families and homeownership (and the financial security meant to accompany it).


The Urban Institute suggested “policy interventions” including “implementing a restorative housing wealth program that reduces debt and creates value for new homeowners … building fair housing and antiracist testing into home valuation and appraisals and the technologies underlying these systems … and expanding homeowner relief and stimulus programs to reach more households of color and avoid further black wealth erosion.”

Read the full study here.