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The gap between the value of homes owned by Black and white homeowners is the smallest it has been in two decades, according to a new report.
The report released Monday by Zillow found that between February 2020 and January 2023, Black homeowners saw their homes’ values increase by 42.5 percent compared to 38.5 percent for U.S. home values overall and 37.8% for white-owned home values. The same time period saw Hispanic and Asian home values increase by 38.5 percent and 37 percent, respectively.
Home price valuation among Black homeowners has outpaced all other ethnicities since 2014, according to the report. In February 2020 the typical Black-owned home was worth 17.3 percent less than the typical U.S. home. By January 2023 that gap had shrunk to 14.8, the closest Black-owned homes have been in value to the typical U.S. home since the year 2000.
“These gains are extremely important in terms of increasing wealth among the Black community, as homeowners of color are more likely to have the bulk of their household wealth tied up in their homes,” Nicole Bachaud, senior economist at Zillow said in a statement.
Among the 50 largest metropolitan areas in the nation, Detroit saw the home-value gap shrink the most — by nine points — between 2020 and 2023. Kansas City and Chicago also saw significant shrinkage in the home-value gap, shrinking by 8 and 6.9 percent respectively.
A large gap persists in the amount of Black Americans who own their homes, with 44 percent of Black households owning their homes, according to 2021 Census data, compared to 73.3 percent of white households.
Black homeownership increased 2 percentage points from 2019 to 2021, compared to 1.3 percent for the nation at large. Black women between the ages of 45 and 54 saw the largest increase in homeownership rates during that period, logging 2.9 percentage points of growth. Black men between the ages of 35 and 44 saw a 2.5 percent jump in homeownership rates, the second largest increase.
Black Americans have faced restrictive barriers to homeownership for generations due in part to discriminatory lending practices by banks, such as redlining and unequal access to lines of credit. Black-owned homes have additionally been subject to appraisal bias with some appraisers valuing their homes less than comparable homes owned by white families.
“Due to years of redlining and other forms of systemic discrimination, housing disparities between Black and white families persist. Policies and interventions like expanding access to credit, building more affordable homes and finding new approaches to mitigate appraisal bias are keys to achieving housing equity,” Bachaud said.