Racial Divide in Homeownership

Homeownership is one of the most common routes for Americans to accumulate wealth and secure financial stability. But new research highlights the wealth gap between black and white Americans when it comes to owning a home.

An Urban Institute study of the 100 U.S. cities with the largest African-American populations reveals that none of those urban centers have closed the gap between black and white homeownership. The regions with the widest gaps are the Northeast and Midwest. Of the five cities with the largest number of black households—Atlanta, Chicago, New York City, Philadelphia, and Washington, D.C.—four are in those regions.

Minneapolis has the biggest ownership gap between blacks and whites (50 percent), and Albany, N.Y., has the lowest black homeownership rate overall (20.1 percent). Charleston, S.C., has the greatest black homeownership rate (53.5 percent), and Killeen, Texas, a city with about 26,000 black households, has the lowest homeownership gap overall, with an African-American homeownership rate of 48.5 percent.

The Urban Institute attributes the homeownership gaps to a variety of factors, including city size, economic and job opportunities, home prices, affordability, and type of housing stock. For example, in examining these metrics for Minneapolis, the study authors found that income growth has plateaued in the city, while home prices and population growth have been markedly accelerating.

The study’s authors conclude that the homeownership gaps between blacks and whites are directly related to black people having less wealth than whites. Less money in savings and retirement funds, less access to educational opportunity, and poorer health outcomes are all part of the wealth gap between African Americans and whites. Such gaps in homeownership and wealth indicate a persistent imbalance of financial security in the nation.