The Black-White Homeownership Gap: A 30-Point Divide Persists Nationwide

The homeownership gap between Black and white families in the United States remains a profound 30 percentage points, with a 44% rate for Black families compared to 73.7% for white families. This disparity, rooted in historical discriminatory policies and sustained by contemporary economic barriers, represents a significant wealth-building challenge for Black households. While rates vary significantly by metropolitan area—from a low of 25% in Minneapolis to a high of 51% in Washington, D.C.—the national trend shows a persistent divide that has narrowed only marginally in recent years. Systemic issues in housing and finance continue to impede progress, making this gap a critical focus for policymakers and the real estate industry.

What Is the Current National Homeownership Gap?

As of the first quarter of 2020, the U.S. homeownership rate for Black families was 44%, a figure that may be vulnerable to economic shifts caused by the coronavirus pandemic. In contrast, the rate for white families was 73.7%. This nearly 30-point gap means that Black families are significantly less likely to build equity through real estate, a key component of generational wealth. The terms "family" and "household" are used interchangeably in housing data to refer to people living together in a housing unit. The value gained from home equity often funds higher education, business startups, or down payments for the next generation, advantages that many Black families have historically missed.

Which Metros Have the Largest and Smallest Gaps?

The homeownership gap is not uniform across the country. An analysis of metropolitan areas with over one million residents reveals stark regional differences.

• Lowest Black Homeownership Rates: Minneapolis has the lowest rate, with just 25% of Black families owning their homes. It is followed by Milwaukee (27%) and Salt Lake City (28%). These areas also have some of the largest racial homeownership gaps, exceeding 40 percentage points.
• Highest Black Homeownership Rates: Washington, D.C., has the highest rate, where just over half (51%) of Black families are homeowners. It is followed by Birmingham, Alabama (50%) and Richmond, Virginia (49%). Washington, D.C., also has the smallest gap (21 points) between Black (51%) and white (72%) families.

The following table illustrates homeownership rates across major U.S. metros:

Why Do These Homeownership Disparities Exist?

The roots of today's gap are found in historical housing policies, while contemporary economic factors perpetuate the divide.

Historical Housing Discrimination: In the first half of the 20th century, discriminatory practices like redlining—a now-outlawed practice where lenders refused to issue mortgages in predominantly Black neighborhoods—systematically denied homeownership opportunities to Black families. Another policy, restrictive covenants, written into property deeds, explicitly prohibited the sale of homes to Black people and other minorities. The financial impact of these policies has been profound; one analysis estimates families in redlined neighborhoods have missed out on over $200,000 in home equity gains over the past 40 years.

Current Economic Barriers:

• Income and Affordability: The median income for Black households in 2018 was $41,511, significantly lower than the $67,937 median for white households. This income gap, combined with rising home prices, creates a substantial affordability challenge.
• Lending and Debt: Following the Great Recession, Black households experienced foreclosure at nearly double the rate of white households. Subsequently tightened lending standards have made it harder for all buyers to secure a mortgage, but disproportionately affect Black families. Furthermore, student debt is a more common obstacle for Black potential homebuyers, delaying their entry into the market.

What Steps Can Be Taken Toward Equity?

Addressing the homeownership gap requires a multi-faceted approach involving industry commitment and government policy. Key areas for focus include:

• Increasing Financial Education: Promoting understanding of how homeownership builds wealth is crucial for potential first-time buyers.
• Supporting Affordable Housing Initiatives: Policies that increase the supply of affordable homes can help more families break into the market.
• Promoting Fair Lending: Ensuring mortgage lending is accessible and fair to all qualified borrowers is a fundamental step.

Based on our experience assessment, systemic change in the housing market will require sustained effort from the real estate industry, construction sectors, and federal and local governments. Closing the homeownership gap is essential for fostering greater economic equity.