WASHINGTON (March 2, 2023) – While the US homeownership rate has risen steadily over the past decade – to 65.5% in 2021 (from 64.7% in 2011), the black homeownership rate has not kept pace with increases for other racial groups. Additionally, people of color face significant purchasing challenges during and even after their home purchase, according to a report released today by the National Association of Realtors®.
the 2023 The Landscape of Race and Home Buying in the United States examines homeownership trends and challenges by race and location to explain the current racial disparities in the real estate market. Taking advantage of the latest from NAR Profile of home buyers and sellers Using data, the report explores the characteristics of who buys homes, why they buy, what they buy and the financial background of buyers by race.
Home Ownership Trends
The report found that there were about 9.2 million more homeowners in 2021 than a decade earlier, but homeownership rates varied significantly by race. The homeownership rate for black Americans (44%) increased less than half a percentage point (43.6% in 2011) and continues to lag well behind Hispanic Americans (50.6%), Asian Americans (62.8 %) and white Americans (72.7%). Consequently, the homeownership gap between black Americans and any other racial group has increased, especially compared to white households (29%), representing the largest homeownership gap in 10 years (26% in 2011).
By contrast, Asian Americans (5 percentage points) and Hispanic Americans (4 percentage points) experienced the largest increases in homeownership rates over the past decade. The Asian American home ownership rate of 62.8% is an all-time high. White American homeownership grew nearly 3 percentage points and has consistently hovered around 70% since 2017.
“Unfortunately, the incredible affordability challenges of the past year have hit minority homebuyers harder than white buyers,” said Jessica Lautz, NAR’s deputy chief economist and vice president of research. “Black buyers are more likely to be first-time homebuyers, who are more sensitive to changes in mortgage interest rates, while white buyers are more likely to have home equity to rely on when making a home exchange.
Racial disparities in housing affordability
Black homeowners spend more of their income on home ownership than all racial groups, with 30% experiencing a cost burden, defined as spending more than 30% of their income on housing. They are followed by Hispanic Americans (28%), Asian Americans (26%), and Whites (21%).
More than half of black renter households (54%) spend more than 30% of their income on rent, the most of any racial group. About 30% of black renters are severely cost-burdened (defined as spending more than 50% of their income on rent), representing nearly 2.5 million households. By contrast, 22% of white renters are severely cost-stricken, representing 5.1 million households.
After comparing the qualified income to buy a typical home with the median income for renter households, the NAR estimates that while 17% of white renters can afford to buy a median-priced home, only 9% of renters blacks can do it all over the country.
“Even among successful homebuyers, African-Americans have lower household incomes, reducing the pool of available inventory they can afford and making their path to homeownership even more difficult in this limited housing inventory environment. Lautz added.
Racial Disparities in the Mortgage Market
Beyond affordability, Black and Hispanic homebuyers also face additional challenges in obtaining a mortgage. African Americans have the highest denial rates for purchasing and refinancing loans. According to data from the Home Mortgage Disclosure Act, 20% of black loan applicants and 15% of Hispanics were denied mortgages, compared to about 11% of white applicants and 10% of Asians. Also, denial rates for African Americans are even higher for home improvement loans. Black Americans were denied applications for nearly 17% of home purchase loans, 17% of refinancing loans, and 51% of home improvement loans.
Homebuyer Demographics by Race/Ethnicity
Using data from its latest Profile of Home Buyers and Sellers report, NAR analyzed the characteristics of recent home buyers, their reasons for buying, the steps they took in the home buying process, and the ways buyers financed buying your home based on race. Among all homebuyers, White Americans made up the largest proportion (88%), followed by Hispanic Americans (8%), African Americans (3%), Asian Americans (2%), and Others (3%).
For down payments, African Americans used 401(k) pension funds more than any other group (16%), up 2 percentage points from last year (14%). Asian Americans received more gifts (22%) and loans (7%) from a family member or friend than all other racial groups.
Hispanic Americans had the highest proportion of student loan debt (46%), followed by African Americans (33%), Whites (17%), and Asian Americans (13%).
Discrimination in transactions
In addition to asking about their recent home buying experience, buyers were asked if they had experienced or witnessed discrimination during their real estate transaction. Half of Hispanic-American homebuyers said they experienced a move toward or away from specific neighborhoods, followed by 29% of white homebuyers, 12% of blacks, and less than 1% of Asian-American homebuyers . Forty-six percent of Hispanic-American homebuyers experienced discrimination based on a landlord’s or agent’s refusal to show the property, followed by 24% of blacks, 15% of whites, and less than 1% of Asian-Americans . Thirty-nine percent of African American homebuyers reported discrimination through home appraisal, followed by 17% of Asians, 9% of Whites, and less than 1% of Hispanic Americans.
NAR works to ensure that Realtors® are active leaders in the fight to close racial gaps in homeownership. NAR co-chairs the steering committee of the Black Home Ownership Collaborative, which has outlined a seven-point plan to create 3 million net new black homeowners by 2030. The NAR has also enhanced the real estate industry’s efforts to end real estate bias. Is “ACT!” fair housing plan, launched in 2019, emphasizes “Accountability, Culture Change, and Empowerment” to promote fair housing in the industry. NAR’s interactive training platform, fairhaven, puts real estate professionals in simulated situations where discrimination may occur in a real estate transaction. In addition, the implicit bias of the association video and classroom trainings We offer strategies to help Realtors® provide equitable professional service to each client.
To increase the nation’s housing stock, NAR advocates that all levels of government: Support the construction of housing that is affordable for the typical consumer; preserve, expand, and create tax incentives to renovate distressed properties and convert unused commercial space into residential units; and encourage and incentivize zoning reform. Expanding new home construction by an additional 550,000 units a year for 10 years would create 2.8 million new jobs and generate more than $400 billion in economic activity. NAR and the Rosen Consulting Group Housing is critical infrastructure: social and economic benefits of building more housing The report examines the causes of America’s housing shortage and provides a range of actions that can effectively address this longstanding problem.
View the NAR’s 2023 Outlook on Race and Home Buying in America at nar.realtor/research-and-statistics/research-reports/a-snapshot-of-race-and-home-buying-in-america.
The National Association of Realtors® is the largest trade association in the United States, representing more than 1.5 million members involved in all aspects of the residential and commercial real estate industries. The term Realtor® is a registered collective membership mark identifying a real estate professional who is a member of the National Association of Realtors® and subscribes to its strict Ethical code.
# # #