Housing Gap

5 Reasons Why the Racial Homeownership Gap Exists (and How We Can Help Close It)

Here are five factors that contribute to this inequity and, more importantly, what we can do to help remedy each.

One might expect the rate of Black homeownership to increase over time, but this is sadly not the case. Black homeownership peaked in 2004 at only 49.7 percent and fell to 40.6 percent in 2019, a 60-year low according to a study by Pew Research. In fact, the research shows the gap between Black and white homeownership has increased since before the Fair Housing Act from 27 points in 1960 to 29 points in 2022. We all know homeownership is one of the best ways for families to build wealth, which makes this gap a particularly important racial justice issue.

Here are five factors that contribute to this inequity and, more importantly, what we can do to help remedy each.

Download as Sharable Graphics

The Persistence of Redlining

Redlining today can mean a number of racist systems that prevent Black homeownership, but the original meaning comes from 20th-century state-sponsored housing segregation that favored investments in white neighborhoods over Black ones. These practices stayed in use for decades, and while they have been outlawed since 1968, the lingering effects still affect American citizens. The effects of Redlining will not go away on their own; policy changes that directly undo these issues must be supported. Our Annual Partner, Habitat for Humanity, provides a list of five policy solutions to advance racial equity in housing.

America’s History of Slavery

Like segregation, slavery has left a lasting mark on our nation. After the Civil War, Abraham Lincoln granted freed slaves 400,000 acres of land to help them begin building their own wealth, but this only lasted a few years, as Lincoln’s successor, Andrew Johnson, reversed the policy and returned the land to the white former slave-owners. Land and wealth pass down through generations, so Black families still have significantly less equity than white families, and our history of slavery has a lot to do with it. The Federal Reserve estimates Black families have about 15 to 20 percent of the net equity of white families. The Urban Institute suggests five specific policies that help close the wealth gap.

Subprime Lending Practices

It’s widely known that subprime lending practices caused The Great Recession, but did you know Black families suffered the worst? The National Bureau of Economic Research shows Black Americans were 105 percent more likely to have a high-cost mortgage between 2004 and 2007. These predatory lending practices and their consequences stripped equity away from Black Americans even more. While lending practices have improved, Black Americans still receive higher mortgage rates for reasons unrelated to creditworthiness according to the Journal of Financial Economics. Early conversations on what can remove bias from the process are being debated, such as the use of AI, but for now, Business Insider has tips for Black Americans to increase their chances of avoiding unfair lending practices.

The Wage and Opportunity Gap

Saving up enough money for the rising cost of housing is a huge issue for Americans at large, but it’s a particularly difficult challenge for Black Americans who earn less than their white counterparts. A complex web of social, economic and political factors contributes to this inequity, so it is very difficult to find specific solutions to this issue, but the Society for Human Resource Management has a few suggestions for ways employers can confront the problem in their own businesses including performing pay audits and adjusting hiring practices.


Gentrification is the process by which a neighborhood’s character, culture and cost of living transforms by an influx of affluent residents, thereby displacing the people who originally lived there. This is a hot-button issue with complicated nuances – after all, improving disinvested areas and dismantling segregation are good things – but when it contributes to racial housing inequality, that’s an issue. So the question is, how can communities be revitalized in ways that lift up the current residents and preserve the culture? Shelterforce lists seven policies that could help heal communities without causing gentrification.


With so many factors at play, many of which have not been mentioned here, addressing the racial homeownership gap does not have a simple solution. It will require changes at every level of society. By educating ourselves on the issue, we come a step closer to closing the gap so we thank you for taking the time to learn with us. As a Realtor® Association, we have the collective power to make a sizable impact. We hope you will continue to seek out information, share what you discover and adjust your businesses to create a fair homebuying process for all.

For more information, please visit the Diversity Resources page on our website.