A look at homeownership rates and the racial homeownership gap by state and metro area.
Homeownership is one primary way of building wealth. The overall rate of homeownership in the United States was 64.6% in 2019, but there is a significant gap in homeownership when the rate is broken down by racial demographics. Nearly three-fourths (73.3%) of white households were homeowners, while only 42.1% of Black households owned their home. Black Americans have the lowest rate of homeownership of any racial or ethnic group.
Although the overall rate of homeownership has steadily declined since the Great Recession, Black homeowners have recovered more slowly. While white homeownership is down 1.5% since 2009, Black homeownership has declined more than 4%.
The discrepancy between Black and white homeownership rates, which is referred to as the racial housing gap, is greater today than it was in 1960. The gap was 26 points, but has since grown to 33 points, and is even wider in many areas according to our research. Additionally, while the overall rate of homeownership has grown for all Americans, it increased only by 4% for Black families, compared to 9% for white families. For this report, we analyzed 2019 homeownership rates and the racial gap in all 50 states plus Washington D.C., and the 75 most populous metro areas.
The homeownership gap is the difference between the rate of white and Black homeownership. We determined the rate of homeownership by dividing the total number of householders from a given racial group by the number of householders from that racial group who also own their home. It is expressed in points. (The numbers are from 2019, which is the most recent data set available at the time of publication. You can read more about the data at the end of this article.)
The largest gap between white and Black homeownership is found in the Midwest, while smaller gaps are found in southern states, plus Washington D.C., Alaska, and California. North Dakota had the widest gap at 61.5 points and Washington D.C. had the smallest at 15.3 points.
In other words, in North Dakota, of the 9,970 homes for which a Black person is the householder, just 5.2% of those householders actually own the home. But of the 280,928 North Dakota homes for which a white person is the householder, 66.7% of those householders own the home.
A larger homeownership gap tends to correspond to a low rate of Black homeownership, so similarly the rates of home Black homeownership are lowest in the Midwest, and highest in the South.
You can see the percentage of Black households that are homeowners as well as the percentage of white households that are homeowners in every state using the chart below.
Get your finances right, one money move at a time. Sign up for our free ebook.
An ebook to e-read while you’re e-procrastinating everything else. Download “Finance Your Future” today.
We also analyzed homeownership rates in the nation’s largest metro areas. The rate of Black homeownership ranges from 21.9% in Des Moines, Iowa, to 54.3% in Charleston, South Carolina.
|Metro area||Homeownership rate|
|Des Moines-West Des Moines, IA||21.9%|
|Minneapolis-St. Paul-Bloomington, MN-WI||25.6%|
|Urban Honolulu, HI||25.7%|
|Salt Lake City, UT||25.9%|
|San Jose-Sunnyvale-Santa Clara, CA||27.5%|
|Las Vegas-Henderson-Paradise, NV||28.4%|
|San Diego-Chula Vista-Carlsbad, CA||29.0%|
|Charleston-North Charleston, SC||54.3%|
|Baton Rouge, LA||51.3%|
|Cape Coral-Fort Myers, FL||48.9%|
|New Orleans-Metairie, LA||48.8%|
|Atlanta-Sandy Springs-Alpharetta, GA||48.7%|
In the cities we surveyed, the smallest difference in homeownership rates was 20.2 points in Charleston and the largest was 52.0 points in Des Moines. You can see a detailed breakdown of the 75 largest metro areas in the chart below.
Just like with the states, a larger gap usually corresponds to lower rates of Black homeownership in the cities. Des Moines has the largest racial homeownership gap at 52.0 points, and lowest rate of Black homeownership at 21.9%. Minneapolis, Albany, Allentown, and Salt Lake City similarly show a larger racial gap between Black and white homeownership with Black homeownership rates at the lower end of the spectrum.
However, one state proves an outlier. Hawaii has a low black homeownership — the fourth lowest at 24.1% — but the racial homeownership gap is very small: the gap between Black and white homeowners is the third smallest in the country. This is because homeownership rates are low for everyone in Hawaii, regardless of race. 50.2% of white families are homeowners, which is much lower than the national average.
Hawaii’s low homeownership rates may stem from the low affordability of homes. Homes in Hawaii are expensive (they have the highest average property value) and our data from an earlier story revealed that it’s also the most house-poor state.
There are many reasons behind the racial homeownership gap. According to the Consumer Finance Protection Bureau (CFPB), Black borrowers are denied at a higher rate (16.0% compared to 6.1% for white borrowers) generally due to lower credit scores or lack of down payment, as revealed by mortgage application data.
But the gap may also suggest systemic issues and racist policies, like discriminatory lending practices. Redlining, a practice which restricts minorities to certain neighborhoods by denying them home loans in more desirable ones, was outlawed years ago, but a de facto version of it still persists today. And although big banks have recently committed to fighting the racial wealth gap and helping to increase minority homeownership by expanding homeownership programs, many of these banks issued a disproportionate share of subprime mortgage to Black borrowers in the years leading up to the 2007 housing crisis, which led to high rates of foreclosure.
There is another less conspicuous reason why Black homeownership may be lagging. Black families are less likely to receive an inheritance, which can help prospective homeowners cover a down payment, than white families are. Many studies show these intergenerational transfers help fuel a family's wealth. In fact, the money and assets that families pass on to each other could account for at least half of someone’s aggregate wealth, but Black families are less likely to receive these gifts or bequests; only 26% of Black families received or expected to receive an inheritance, compared to 47% of white families according to a recent survey conducted by the Federal Reserve.
Not only do Black people face lower rates of homeownership, they own homes that are of lower property value than those owned by white people. Mortgage application data reveals Black people have less equity in their homes upon purchase. Having more equity in your home’s value means that you effectively own more of the home, which adds to your overall wealth and net worth. As you make steady mortgage payments over the years, you will gain more equity. Another way to increase your home equity would be to make a larger down payment at purchase, which enables you to take out a smaller loan.
Our research finds Black borrowers purchasing a home had larger loan amounts relative to the property value, which results in less equity. They had a smaller percentage of their home’s value in equity compared to white borrowers. This was true in cities whether Black homeownership rates were low or high. You can see the chart below for examples from a few different metro areas (abbreviated for clarity).
|Equity as a percentage of housing value|
|City||Black homeowner||White homeowner|
|Salt Lake City||12.9%||20.5%|
Owning a home can eventually allow someone to pass down the property, or its profits, to their children, which in turn adds to their wealth. The median wealth of Black households was only $24,000 — 15% less than white families whose wealth averaged $188,000.
To calculate homeownership rates, we used data from the U.S. Census, using the same methodology they use to calculate homeownership rates. The rate of homeownership is a measure of how many people own (or are in the process of buying a home) as opposed to rent in any given city or state. (The total number of households, or families, divided by the number of households, or families, that own their home.)
Mortgage application data is publicly available from the Consumer Finance Protection Bureau thanks to the Home Mortgage Disclosure Act.
Get essential money news & money moves with the Easy Money newsletter.
Free in your inbox each Friday.