YEAR IN REVIEW ADDRESSING THE RACIAL HOMEOWNERSHIP GAP URBAN INSTITUTE

In 2019, the 30-point gap between white and Black households’ homeownership rates (72% vs 42%, respectively) was larger than in 1960, when overtly discriminatory practices and policies were allowed in the selling and financing of homes. Urban Institute research projects the gap will grow without concerted action. The Black Homeownership Collaborative was launched in 2020 with a goal of increasing the number of Black homeowning households by 3 million by 2030. This could result in 9.456 million Black homeowners and move the Black homeownership rate above 50% for the first time.

The intervening two years have seen pandemic and economic turbulence, generationally low interest rates followed by an unprecedented spike, ballooning home prices and an acute shortage of affordable homes. From 2019 to 2021 homeownership actually increased by 1.3 percentage points overall and Black homeownership rose even more, by 2 percentage points, representing an estimated 261,855 net new Black homeowning households over this period. This progress was especially driven by young, higher-earning and highly educated borrowers.

How can we protect, maintain, and accelerate these gains? This is an urgent question, as younger, firsttime buyers and homeowners of color are losing ground in the current market because of the sharp increase in interest rates. Additionally, foreclosure moratoriums are ending, and recession prospects threaten the sustainability of Black homeowners.

Let’s look at what has happened since the end of 2021, the last point for which reliable data on the total number of Black homeowning households is available.

› New Black homeowners: Preliminary Home Mortgage Disclosure Act (HMDA) data show 291,999 Black borrowers used mortgages to buy homes in 2022. Applying the typical firsttime homebuyer share estimated by CFPB to be 45% from 2010 to 2018—we can estimate that roughly 131,399 of those loans were to Black first-time homebuyers.1

› Home losses: Foreclosure rates average higher in zip codes with larger Black shares of the population. Pandemic foreclosure moratoriums kept foreclosure rates low. As these wind down, foreclosures are returning to pre-pandemic levels, and disparities reemerging. We estimate that 51,000 Black households had foreclosures started in 2022.2

› Using these rough calculations, our preliminary estimate is that roughly 80,399 net new Black homeowners were added in 2022, bringing the total net new Black homeowners since 2019 to roughly 340,254. This estimate does not include homes acquired without mortgages, nor does it count exits from homeownership due to sale and moving to renting or to death of homeowner. It focuses on outcomes which can be influenced by changes to policies and practices.

Data to guide strategies to close the racial homeownership gap can be found in this dashboard for the Black Homeownership Collaborative’s efforts. For in depth discussion of trends and forces shaping Black homeownership, see 2022 State of Housing in Black America by Jim Carr and Michela Zonta, published by the National Association of Real Estate Brokers.