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A Look At Home Ownership in Honor of Black History Month

As we wrap up Black History Month, it’s important that we look back and appreciate all the progress we’ve made as a country in addressing the issue of racial inequality. Though it may be difficult for some folks to wrap their heads around, discrimination was a practice that was commonplace recently enough that stories of racist incidents still resonate to this day. Prior to the passing of the Fair Housing Act of 1968, discriminatory practices such as redlining, blockbusting and steering were still completely legal and widely practiced. In fact, there are still people living today that can recall being told they would not be approved for a loan or be shown a house simply because of the color of their skin.

For those unfamiliar with these practices, let’s quickly go over each one quickly and explain what they are. Redlining was a discriminatory practice wherein institutions such as banks and insurance companies would refuse or limit loans and mortgages within specific geographic areas because they were designated as being for blacks. Blockbusting was the practice of persuading people to sell their homes in fear that another race or class may move into the neighborhood and lower property value thereby enabling them to capture as much value from their home now as possible. Last but not least, steering was the practice of having real estate agents influence home buying decisions simply based on the buyer’s ethnicity - basically meaning that agents would limit the buyer’s options to homes that were deemed as “appropriate” for their skin color. Whew. We know - it's a lot to take in. But here's why it matters to understand this history.


In this era, discrimination was seen as the natural order and is the reason why people like Lisa Rice of the National Fair Housing Alliance can still recall a story where her mother was told she couldn’t be shown a house in Toledo, Ohio because her family was black and could cost the agent her job. Thankfully this is no longer the case. We have racially and culturally integrated schools that strive towards the sense of equality and justice that Martin Luther King Jr so bravely envisioned for our country on August 28, 1963.

Due to the efforts of Dr. King and the many civil rights leaders we’ve been able to make huge progress in terms of racial inequality as this country began to experience its greatest period of economic growth. Unfortunately that wealth has not been equally distributed amongst all of its citizens. While housing prices and the wealth of the general public went up, many minority families' wealth simply stagnated due to being barred from holding well-paying jobs and buying homes in areas where housing values could appreciate more effectively.

Home ownership in the United States is widely seen as the most effective way to build generational wealth. On average homeowners in the United States have a household wealth of $231,000 while the average renter only has a household wealth of $5,200 which is quite a drastic difference. As you can imagine the discriminatory practices we touched on earlier in this article have kept many black families from becoming homeowners themselves and though it may be reasonable to think that this should be getting better as things have with civil rights issues this simply isn’t the case.

Urban Institute data tells us that the current gap between white and black home ownership currently stands at 30% which is actually higher than the 27% it was at back in 1960. So clearly there’s more work to be done. Black home ownership hit a record low 40.6% in 2019 which improved slightly to 47% in 2020 though it’s still to be seen what the figures will look like now after the impact of COVID. Though the data so far seems to indicate that there’s some measure of progress being made, home ownership for Black Families is still noticeably below the home ownership rate of other ethnicities which sits at 76% for White Americans, 51.4% for Hispanic Americans and 61.4% for Asian, Native Hawaiian and Pacific Islanders. If we break that data down further by looking specifically at the younger generation things start to look even more bleak as Black home ownership among the 18-34 year old crowd drops down to 18.2% while White home ownership in the same demographic is more than double that rate at 41.6%.

The modern trend of gentrification can also be seen as possibly making things worse because as areas start to develop and become more desirable for higher-income families to move in, housing prices will move up accordingly and possibly drive out long-time residents due to dramatic increases in property taxes that they can no longer afford. This can be seen happening all across the country from a city like Oakland in California over to cities on the other coast like Manhattan and Brooklyn in New York.

With all that said, it’s not all doom and gloom. As we can see there are some data points that provide a glimmer of hope that things can and will improve. If we look at history as an example, just because something has been a certain way doesn’t mean it has to stay that way. We can continue to make progress and help support further reforms that can fix these issues at a systemic and policy level. We can also hold people in the system accountable by knowing our rights as home buyers. If you are in the process of buying a home, here are some things you might want to consider. And if you’re not sure of whether buying or renting a home is the right option for you, here's a guide that can help you with that as well.

Interested in learning more about fair housing and even possibly becoming an activist yourself? Feel free to check out the National Fair Housing Alliance.They have a ton of information you can read through to become more knowledgeable about this issue as well as ways you can get involved!

Thanks for sticking with us until the end of this article. If you found this post helpful please like, comment and share with friends and family who you think may also benefit from this information. We're constantly pushing out new content regarding ways consumers can build their credit and wealth while optimizing their path to homeownership. So like always, stay tuned for future updates!

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