The Racial Homeownership Gap Is Worst For Black Millennials

While the racial homeownership gap exists in every generation, Black Millennials have it worse off than any other age group.

That’s according to a new analysis from Redfin, which found that just one-third of Black Millennials own their home (33%), compared to 65% of white Millennials, the largest divide of any generation.

By comparison, 52% of Black Gen Xers own their home, compared to 80% of white Gen Xers. Six in ten Black Boomers own their home, while 85% of white Boomers do.

White and Black adult Gen Zers own their homes at rates around 30% and 16%, respectively – not as bad as the Millennial divide, but still significant.

Black Americans face challenges ranging from the impact of racist housing policies in the past to modern-day redlining scandals. 

“Millennials have consistently tracked behind their parents’ generation when it comes to homeownership because they’ve faced significant financial obstacles and a historic inventory shortage. But that number doesn’t tell the whole story: Black Millennials have borne the brunt of those challenges because they’re at an unfair financial disadvantage due to the country’s history of racial discrimination,” said Redfin Chief Economist Daryl Fairweather.

“Young Black Americans started out behind largely because they’re less likely to have property and money passed down from their parents or grandparents, who faced racial discrimination themselves, and they have stayed behind because they’re still facing discrimination and unfair economic circumstances.”

They are twice as likely to be rejected for a mortgage than white buyers and tend to have higher interest rates even when they are accepted. In today’s high-cost environment, with mortgage rates heading back up above 7%, those barriers are hugely detrimental.

Millennials have faced financial challenges across their adult lives – coming of age during the Great Recession, for example – which has forced this demographic to fight for homeownership in a way their parents never had to. 

During the Great Recession, Black households experienced greater declines in wealth. One study suggested that by 2031, the downturn will have decreased the wealth of the median black household by nearly $100,000, though that number excludes the impact of the Covid pandemic.

The U.S. Department of Housing and Urban Development recently highlighted its impact on the Black community.

The department says it has successfully supported 250,000 Black homebuyers with FHA loans since the start of 2021. As a percentage of its business, the FHA serves Black borrowers at three times the rate of the overall market.

Particular successes include changing how HUD calculates student debt and on-time rent payments to make it easier to secure a loan.

HUD also highlighted its $10 million award to Historically Black Colleges and Universities for research into addressing the housing challenges that Black and underserved communities face.

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