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Residential Department: BackSpace: June 2017



A rising tide of homeownership raises all boats

The U.S. homeownership rate slid downward for the 12th year in a row in 2016, ending the year at 63.7 percent. The homeownership rate for African-Americans, at 41.7 percent at the close of last year, however, paints an even more dismal picture.

The homeownership rate for black Americans is at a level not seen since the 1960s, when race-based housing discrimination was still legal, according to a recent study by the Urban Institute. The African-American rate also stands in sharp contrast to the 72.2 percent homeownership rate for non-Hispanic whites as of year-end 2016.

“There was a lot of overt discrimination throughout most of the 20th century that created this pretty segregated landscape,” says Anju Chopra, a senior policy manager at CFED, a nonprofit group focused on expanding financial security for low- to moderate-income communities. “In more contemporary terms, I think the 2008 housing crisis was a significant set-back for minorities, particularly blacks. For black … households, their wealth was reduced by like half during that downturn.”

The dour homeownership rate for African-Americans is troublesome in light of future demographic trends as well, given African-Americans, according to Wells Fargo, are projected to represent some 17 percent of all new households by 2024.

“The decline in homeownership has been most marked for younger members of the black community,” the Urban Institute reports in a recent study analyzing homeownership rates through 2015. “The homeownership rate for black 35- to 44-year-olds fell from 45 percent in 1990 to 33 percent in 2015, half the level for whites of the same age and lower than the black homeownership rate in 1960.”

The picture is even more stark for millennial African-Americans — ages 25-34 — whose homeownership rate as of 2015, according to the Urban Institute, was 15.5 percent. That mark is significantly lower than it was in 1960, when the group’s rate was 22.4 percent.

In fact, between 1970 and 2000, after the passage of the Fair Housing Act, black homeownership overall jumped by nearly 6 percentage points. That gain, however, was completely wiped out between 2000 and 2015. The bulk of that digression occurred from 2010 onward — in the wake of the Great Recession.

The devastatingly low homeownership rates among African-Americans, particularly among younger blacks, has serious implications for the future of the overall housing market as well. By 2044, according to Census Bureau data, the nation will become “majority minority.”

Cy Richardson, senior vice president for programs at the National Urban League, says homeownership is a key to building intergenerational wealth, and if that isn’t happening, it puts future generations of African-Americans — and the housing market in general — at risk.

“The loss of wealth is not just an immediate concern as a snapshot in time,” Richardson explains. “It’s a very sad and tragic motion picture, because we’re really setting the path for tomorrow’s kids, the generation after the millennials, who will have nothing to start with.

“There’s no equity, no tradition, no commitment and understanding and experience of homeownership because large segments are semi-permanently locked out of that.”

The loss of wealth is not just an immediate concern as a snapshot in time.
Cy Richardson, Senior vice president for programs, National Urban League 

Richardson adds that the problem, if not addressed, is going to ensure that there will be a dearth of qualified African-American homebuyers in the future who can purchase homes, which will affect demand for all homes, including those owned by white home-owners. “A majority of [potential] homeowners will not be white in 15 years, and if they are not in a position to buy homes, that could create a crisis, because there will be a lack of qualified buyers for the housing stock that is out there,” he says.

In fact, as of 2015, more than half of all African-Americans — and nearly 60 percent of Hispanics — were millennials or younger, the Pew Research Center reports. Millennials represent the nation’s largest generation, surpassing even the baby boomers, and nearly 45 percent are minorities.

These minority millennials represent the future of the U.S. housing industry. The Urban Institute projects that between 2010 and 2030, minorities will dominate the home-buying market, with less than 7 percent of the projected 9 million new homeowners being white, compared with 11 percent who will be African-American.

As of year-end 2016, the U.S. Census Bureau reported that the overall home-ownership rate for individuals under 35 years of age [millennials] stood at a subpar 34.7 percent. That begs the question of whether the low homeownership rate among millennials overall is to some degree a byproduct of the anemic home-ownership levels among African-Americans and Hispanics — the latter a group with an overall homeownership rate some 26 percentage points below that of whites.

Richardson describes these millennials as the “canaries in the coal mine,” warning us to pay attention now before it’s too late.

Doug Ryan, director of affordable homeownership at CFED, says among the solutions for addressing the slide in African-American homeownership is to develop better credit-scoring tools and to increase the stock of affordable housing. “We think there also are ways of reducing the cost of entry for first time homebuyers … through the use of more innovative, flexible, targeted loan products,” he says.

Another way to address the problem is to better educate the mortgage industry’s existing workforce and, in the longer term, to recruit and develop more employees of color in the industry, according to Tony Thompson, founder and CEO of the National Association of Minority Mortgage Bankers of America.

“For our industry, we have to realize that over the next 10 to 15 years, we’re going to have to recruit as well as prepare our existing workforce to be able to interact with those segments of the homebuying population that are the growth segments — which include women and also people of color — minorities,” Thompson says.  


Bill Conroy is editor in chief of Scotsman Guide Media. Reach him at (800) 297-6061 or

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