Homeownership

People of Color Less Likely to own a Home

Homeownership is the single largest source of wealth creation for Americans.  Fully 31% of American wealth is in home equity, and 69% of the general population owns a home.  Lower homeownership rates among people of color therefore directly translate to slower wealth creation relative to Whites.  The reasons for this imbalance are largely due to historic discrimination.

While 74.9% of Whites in the United States as a whole own their homes, only 59.1% of Asians, 47.5% of Blacks and 48.9% of Latinos do. [1]  In California, 58.1% of the population owns their home, including 68.4% of Whites, 60.4% of Asians, 41.7% of Blacks, and 45.7% of Latinos.

[1] United for a Fair Economy- The Silent Depression State of the Dream 2009 http://www.faireconomy.org/files/pdf/state_of_dream_2009.pdf

Segregation and home equity

If the difficulty of home purchase is compounded for lower-income people, it is further compounded for lower-income people of color.  David Rusk has shown that across the nation's metropolitan areas in 2001, African Americans realized 18% less equity from their homes than Whites, controlling for income.  This means that "for every dollar of income, white homeowners owned $2.64 worth of house.  By contrast, Black homeowners owned only $2.16 worth of house."[2]  He therefore concludes that African Americans pay a de-facto "segregation tax" by virtue of their race.  This equity disparity between Whites and Blacks has serious implications for wealth creation.

[2] Rusk, David.  "The 'Segregation Tax': The Cost of Racial Segregation to Black Homeowners."  The Brookings Institution Center on Urban & Metropolitan Policy.  October 2001.  Available at http://www.brookings.edu/urban.

Related Publications

HMDA FY2007 Full Report

FISCAL YEAR 2007 UPDATE.  The credit crunch has hit communities of color hardest, particularly lower-income communities of color.  The mortgage industry as a whole originated 39.3% less loans to Latinos this fiscal year, and 34.1% less loans to African Americans.  The most dramatic decrease has been among lower-income African American borrowers, who received 72.4% less loans this year than last year.  These changes, combined with the disproportionate loss of wealth in communities of color due to foreclosures, are likely to widen the homeownership gap even further.

2008 Bank Board Diversity Report