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Why the Large White/Black Homeownership Gap Remains Same as 1960s

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difference in black and white homeownership rates since the fair housing act

When we think of the American dream, homeownership is likely at the top of the list. And that’s for a good reason. Not only is homeownership a symbol of stability it has also historically been the number one way to build and pass on wealth from one generation to another. 

Black homeownership rate in America is the lowest among all racial groups. What’s even more shocking is that the gap between Black and White homeownership has remained the same or even gotten worse in some areas over the past 50 years. But why? 

According to data from the National Association of REALTORS, there is a 30-point gap between White and Black homeownership rates across America. About 75% of White families own their homes compared to around 46% of Black families. 

It’s not very difficult to understand why this gap in homeownership exists in the first place, but why has it persisted or even gotten worse after the Fair Housing Act in 1968?

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The Fair Housing Act 

The Fair Housing Act of 1968 is a landmark federal law in the United States that prohibits discrimination in the sale, rental, and financing of housing based on race, color, national origin, religion, sex, familial status, and disability.

The Act was signed into law by President Lyndon B. Johnson on April 11, 1968, just a week after the assassination of Martin Luther King Jr. 

According to a research by the Urban Institute, Here are the 3 biggest  factors contributing to the homeownership gap, 

1. Income Gap

As of 2020, the median household income of Black households was $38,183 compared to $61,363 for White households. This income gap has gotten wider, not narrower over the decades. Interestingly, the data also shows the lower the income level is for both racial groups, the higher the homeownership gap is. Only 35% of Black households making between $25,000-$50,000 own their homes while 64% of White households with the same income range own their homes. There can be several factors for this phenomenon, including parental financial assistance for White households making homeownership possible. 

In comparison, the homeownership gap is the lowest, at 9%, among White and Black households with incomes of over $150,000.

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2. Difference in Marital Status

Marriage has been in a decline among all Americans over the last few decades, but the decline is more evident in the Black community. In 2020, only 30% of African Americans were married compared to 52% of Whites. African Americans are the least married of any major racial group in America. Until the 1960s and 70s, Black marriage rates were actually higher. 

Marital status matters when it comes to homeownership. Data shows that 60% of homebuyers are married couples compared to less than 30% being singles. Researchers at the Urban Institute believe if the marriage gap was to disappear among Black and White households, the homeownership gap would decrease 8 percentage points. 

3. Credit Scores

More than 50% of White households have a credit score above 700 compared with only 21% of Black households. In addition, 33% of Black households have insufficient credit-use levels to even generate a credit score compared to 18% of White households. This is part of Black households being underbanked, often with less access to credit. 

So while these 3 factors are the biggest reasons for the homeownership gap, there is still a portion of the gap that’s unexplained and can be attributed to various other reasons such as parental wealth, information access, and policies that directly or indirectly affect homeownership.