Is Housing Wealth Equitable in Your City?
This post was updated to reflect that the nation has an estimated $26.3 trillion in primary-residence housing wealth, not $23.6 trillion (corrected 11/23/2021).
A home is typically a family’s largest asset and a key tool for building wealth and economic security. But households of color often hold a smaller share of primary residence housing wealth relative to their share of the total household population.
Nationwide, white households made up 67 percent of the approximately 123 million US households in 2019, yet they owned 76 percent of the $26.3 trillion in primary residence housing wealth. Although there were twice as many white households as households of color, white households held nearly three times more of the primary residence housing wealth.
This concentration of wealth characterizes local jurisdictions as well. In 96 percent of cities with sufficient data, white households held a disproportionately large share of the primary residence housing wealth compared with their share of the population.
These local-level results confirm what we heard from representatives in Philadelphia, Atlanta, Miami, Houston, Minneapolis–St. Paul, and Riverside–San Bernardino: economic and racially motivated discrimination can limit the benefits of homeownership for households of color by reducing their likelihood of owning a home (their homeownership rates) and the financial benefits of homeownership (measured here as home values). In response, we have created a tool to quantify the racial and ethnic homeownership disparities in cities across the country and illuminate the key reasons underlying them.
Cities with large populations of people of color can still experience housing wealth disparities
Nationwide, households of color own a smaller share of housing wealth partially because they make up a smaller share of the population. But even in areas where households of color are the majority share, they often own a disproportionately small share of the housing wealth, by which we mean the total value of primary residence homes (PDF) not including housing equity, or the difference between home value and the debt secured by the home.
In both Philadelphia and Atlanta, Black households represent a large share of the population. In Philadelphia, Black households are the largest share of all households, at 39.7 percent, but they only own 26.8 percent of the primary residence housing wealth. By contrast, white households are 39.2 percent of the population, yet they own over half the primary residence housing wealth, at 56.9 percent.
These disparities are more staggering in Atlanta, where Black and white households represent a roughly even share of all households—44.3 percent and 44.6 percent, respectively. Despite the similarity in household share, white households own 71.5 percent of the city’s housing wealth, which more than quadruples the 17.4 percent of all primary residence housing wealth owned by Black households.
In Houston, Hispanic households represent the largest population share, at 36.5 percent, yet they own half that proportion of the primary residence housing wealth, at 18.3 percent. Although white households are less than one-third of all households in Houston, 30.5 percent, they own 62.2 percent of the primary residence housing wealth. Black Houston households suffer significant wealth disparities as well, representing 22.8 percent of all households but just 7.9 percent of the primary residence housing wealth.
Our findings suggest that even in cities where people of color are a majority of the population, they often own a smaller portion of the homes in neighborhoods in which they live. These disparities can have implications for the ability of households of color to achieve economic stability and prosperity compared with their white counterparts. Housing wealth ownership also impacts the political and social experiences of people of color, including local political power (or lack thereof), civic engagement, and how much say households have over what happens in their neighborhoods.
How policymakers can address the underlying primary residence housing wealth gaps
Black and Hispanic households in particular are less likely to become homeowners than white households and, when they do attain homeownership, tend to own lower-valued homes. These trends suggest that Black and Hispanic households find it more difficult to achieve, benefit from, and sustain homeownership, which can result in disproportionate housing wealth outcomes.
To close these gaps, policymakers will need to employ a mix of strategies to increase access to homeownership and its accompanying benefits. Expanding the supply of affordable single-family housing will be key to addressing housing supply shortages in many US cities and in turn closing homeownership gaps. But policymakers should consider tailoring supply expansion to the needs of the community. Some cities lack land for new construction, and infill development could provide a solution. In other cities, a lack of smaller affordable units is a more pressing issue, so expanding the supply of manufactured, pre-cut, and panelized housing could address supply gaps.
Additionally, down payment assistance (DPA) can boost homeownership for households of color and increase the value of homes they can afford. With median parental wealth for white young adults ($215,000) far exceeding median parental wealth for Black ($14,397) and Hispanic ($34,980) young adults, policymakers could target down payment assistance to first-generation buyers to reduce intergenerational wealth disparities. But some households of color may feel that DPA programs lack cultural sensitivity. Expanding culturally specific financial education and homeownership services, such as equitable access supports for multilingual and multigenerational households, could boost DPA applications among some households of color and improve housing wealth outcomes.
Any equitable housing policies must also address the ongoing legacy of systemic racism, including redlining, racial covenants, and purposeful disinvestment in communities of color. Each of these historically discriminatory policies continues to worsen homeownership outcomes for people of color to this day. Targeted equitable investment in neighborhoods of color could help combat decades of disinvestment and subsequently raise homeownership and home values.
To achieve racial equity, policymakers must address housing wealth gaps
Primary residence housing wealth data highlight two potential disparities: people of color are less likely to achieve homeownership and tend to own lower-valued homes. In many cities where people of color have made major contributions to the history, culture, and economy—like Philadelphia, Atlanta, and Houston—they are still less likely to reap the subsequent housing wealth benefits. On top of that, these gaps can also leave households of color more vulnerable to economic downturns and other shocks.
With our data tool, policymakers, consumer advocates, and industry leaders can gain a clearer understanding of housing wealth inequity in their city. We hope that city leaders will use this tool to identify the local determinants of homeownership gaps by race and ethnicity and to craft or strengthen policies that ensure people of color can equitably benefit from living in their city.
The Urban Institute has the evidence to show what it will take to create a society where everyone has a fair shot at achieving their vision of success.
(Sean Pavone/Getty Images)