During the pandemic, black and Hispanic homeownership rates increased by 2 and 2.5 percentage points, respectively, outpacing white homeownership by 1 percentage point.
According to an Urban Institute analysis, while historically low mortgage rates enabled high-earning, highly educated borrowers across all racial and ethnic groups, they were especially important in increasing homeownership rates among Black and Latino households.
From 2019 to 2021, the homeownership rate for Black households increased from 42% to 44%, 72% to 73% for white households, and 48.1% to 50.6% for Hispanic households.
In fact, after a steady decline since the Great Recession, the Black homeownership rate finally increased between 2019 and 2021.
Young, well-off Black and Latino families purchase homes.
Across all racial and ethnic groups, the proportion of homebuyers under the age of 45 increased from 51% in 2019 to 55% in 2021. This change was most pronounced among Black homebuyers under 45, whose share increased by 5.3 percentage points, compared to a 4-point increase among Latino homebuyers and a 3.5-point increase among white homebuyers.
Households with high incomes and high educational attainment were more likely to access homeownership in general, with the share of loans made to borrowers with annual incomes above $75,000 increasing by nearly 4 percentage points. According to the analysis, the growth in the share of Black and Latino borrowers with incomes above $75,000 outpaced that of white borrowers, but most high-income white households were already homeowners, which partially explains the smaller magnitude of growth.
“The reason we saw this increase in Black and Hispanic households becoming home buyers is because of a lot pent-up demand. Home ownership among the younger generation has been significantly delayed. So, finally, as interest rates fell, a lot of people were able to afford to buy a home,” says Jung Choi, an Urban Institute researcher. “Among people of colour, such as Black and Latino homebuyers, the competition has shifted to a higher-income, more educated population.”
Asian homeownership is 66% for households earning $100,000 to $149,999, compared to 83% for white households, 68% for Black households, and 67% for Hispanic households. Part of this is because white families have a higher ability to assist with down payment assistance due to generational wealth.
During the pandemic, income for black and Hispanic homebuyers increased.
Black and Latino homebuyers saw larger income increases than Black and Latino households overall, with the median increase among Black and Latino homebuyers being around 9% and 7%, respectively.
Between 2019 and 2021, the share of Black and Latino homebuyers with a bachelor’s degree or higher increased more than any other racial or ethnic group, rising from 36% to 42% for Black homebuyers and 30% to 37% for Latino homebuyers.
What can policymakers do to help bridge the racial homeownership gap?
According to recent surveys, current mortgage rates, which have doubled since early 2022, have slowed the rate of growth in Black and Hispanic homeownership rates. (Data for the 2022 American Community Survey and the Home Mortgage Disclosure Act are not yet available).
The share of first-time homebuyers fell to 26% in 2022 from 34% in 2021, and the median age of first-time homebuyers reached an all-time high of 36. The share of Black homebuyers fell by 3 percentage points, while the share of Latino homebuyers rose by 1 percentage point, both significantly less than the 6 percentage point increase in the share of white homebuyers.
“There is a real ability for policies and targeted programmes to make home ownership more sustainable, particularly for Black and Latino households during economic downturns and crises that disproportionately affect them,” says Amalie Zinn, an Urban Institute researcher.
