Juneteenth is a reminder that a large segment of the U.S. population got a 300-year head start. There’s few places this rings more true than in homeownership rates.
The U.S. hit several unfortunate milestones in 2020. Among them is that the Black-White homeownership gap reached 30.4% in Q4 2020, exceeding levels from the Jim Crow era, when racial housing discrimination was legal.
According to the United States Census Bureau, Black Americans have had the lowest homeownership rates of any racial group since the mid-2000’s.
And while many Americans took advantage of pandemic-driven low interest rates and built up savings, Black Americans experienced higher rates of COVID-19 infection and job loss. Now, during the recovery, they are regaining jobs at a slower rate, according to Politico.
Potential bright spots include that Black homeownership rates hit an 80-year (and presumably all-time) high of 47% in the Q2 of 2020 (although there was questionable data collection methods at the time due to COVID-19). The Census Bureau also reported that Black households saw a larger jump in homeownership compared to whites, Asians and Latinos from Q4 2020 to Q1 2021. Whether that’s trend or mirage remains to be seen.
Bridging the racial homeownership gap
Low homeownership is both a symptom and a cause of racial inequality in the U.S. and there are several ongoing efforts to bridge this gap.
Most notably, there are ongoing efforts in the federal government to provide down payment assistance to first-time and first-generation homebuyers.
First, there’s the “Down Payment Toward Equity Act of 2021,” which seeks to assist homebuyers — especially disadvantaged ones — to start building wealth through homeownership. Although still working its way through Congress, it seeks to give $20,000 in down payment assistance to first-time, first-generation homebuyers, and an additional $5,000 for “socially and economically disadvantaged individuals.”
The proposal defines “socially and economically disadvantaged individuals” as those who identify as Black, Hispanic, Asian American, Native American, or any combination thereof.
Then, there’s the “First-Time Homebuyer Act of 2021.” Still in early stages, it seeks to provide a $15,000 tax credit to eligible first-time homebuyers. While it’s less assistance than the $25,000 in down payment assistance, it would be more widely available.
According to the Urban Institute, The Low-Income First-Time Home Buyer (LIFT) Act of 2021 is another proposal in very early stages that could bolster Black homeownership. This seeks to subsidize interest rates and shorten loan lengths to make the monthly payments of a 20-year loan similar to a 30-year loan. This model would create a faster path to home equity and wealth.
Financial support from banks
In addition to legislative efforts, major U.S. banks have recently launched initiatives to close the racial wealth gap.
Most recently and notable is JPMorgan Chase’s $30 billion pledge. $12 billion is earmarked to help 60,000 Black and Hispanic Americans achieve homeownership.
Wells Fargo’s $60 billion NeighborhoodLIFT program launched in 2017. The goal is to increase the number of Black homeowners by 250,000 by 2027. As of April 2021, 60,000 Black families have used the program to buy a home.
Meanwhile, Bank of America offers two down payment assistance programs for modest-income borrowers.
Progress at the National Association of Realtors (NAR)
From the housing industry itself, the National Association of REALTORS® (NAR) enacted the Fair Housing Action Plan in January 2020. Also known as ACT, it seeks to ensure the group’s 1.4 million REALTORS® have better resources and training regarding fair housing practices.
Increasing black homeownership rates
Closing the racial homeownership gap will undoubtedly be a long and challenging effort. But that’s nothing new for Black Americans.
Although these and other programs won’t single-handedly level the playing field, efforts are being made to rectify racial housing disparities.