The homeownership rate among Black Americans in the first quarter of 2021 clocked in at 45.1 percent compared to 73.8 percent among white Americans, according to the results of a new survey released Wednesday by Redfin. A major contributor to the gap: Black homeowners are more likely to face financial barriers than white homeowners, even though they are around twice as likely to be high earners.
Twenty-one percent of Black homeowners earned $150,000 or more when they bought their first home, compared to 11 percent of white homeowners, according to the survey. Yet, just 14 percent of Black homeowners reported making no financial sacrifices to buy their first home, compared to 23 percent of white homeowners.
“Racism is not over,” Brandon Avery, a Marine Corps veteran and information research analyst at the U.S. Department of Homeland Security, said during a symposium hosted by Redfin called Homebuying: The Black Experience earlier this month. “I’ve been ‘redlined’ out of a community that was predominantly white. When I was renting in a primarily white community, I was mistaken for a delivery man while unloading groceries.”
Additionally, the survey found that Black homeowners were less likely than white homeowners to have parents or grandparents who owned homes, thus preventing them from benefiting from generational wealth in the home buying process.
Recent mortgage data also showcases discrepancies.
According to Redfin’s recent analysis of nationwide mortgage denials, 15.9 percent of Black Americans who apply for mortgages are rejected, compared to 7 percent of white Americans. That’s a one in six denial rate among Black mortgage applicants compared to one in 14 among white mortgage applicants.
“Homeownership is closely tied to the American ideal of freedom, and specifically financial freedom,” Redfin Chief Economist Daryl Fairweather said in a statement. “The fact that Black buyers report earning more money and making more financial sacrifices to enter the homeowner class is one example of how difficult it is for Black people in this country to achieve the American dream.”
The places where Black Americans are more likely to get denied a mortgage are Milwaukee, San Francisco, Detroit, Chicago and St. Louis, according to the survey. In those places, the gap exceeds 10 percentage points.
“Getting denied a loan serves a huge blow to a person’s self esteem—especially for people of color, who often feel like the world is already falling on them,” Brittani Walker, a Redfin agent in Chicago, said in a statement. “My mother has been a renter since she moved out of her parents’ house. I tried to get her pre-approved for a mortgage a couple of years ago, but she was rejected because she had some blemishes on her credit. She broke down in tears and hasn’t tried again since. When people of color are stuck in this cycle of renting, their children often meet the same fate, missing out on thousands of dollars worth of home equity. If your parents never owned a home, where do you learn the value of homeownership?”
Redfin’s homeownership and race survey, conducted in early June, polled more than 1,500 respondents, 238 of whom identified as Black, and 499 whom identified as white, according to the company.