Urban Wire Increasing Racial and Ethnic Diversity Will Drive Homeownership over the Next Two Decades
A Study of Texas, Georgia, California and Minnesota
Laurie Goodman, Jun Zhu
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Over the next two decades, new homeowners nationwide will look vastly different than they have in the past for one primary reason: increasing racial and ethnic diversity. Until recently, structural barriers have concentrated homeownership among white families, causing homeownership rates among Black, Hispanic, and Asian families and families of other races to lag behind.

In a recent report, we found that even though those homeownership rates will continue to lag, demographic changes alone suggest that over the next two decades, the net growth in homeowners will be solely among families of color. But changes in household and homeowner composition will look very different across states.

Our projections for Texas, Georgia, California, and Minnesota—states with very different racial and ethnic compositions—show the wide range of homeownership trajectories we expect to see over the next two decades. Texas has highest share of Hispanic families in the nation; Georgia has the highest share of Black families; California has the highest share of families of Asian descent as well as families that are not white, Black, or Hispanic (we have grouped these families together and will refer to them as “Asian and others” throughout this post) and the second-highest share of Hispanic households; and Minnesota has mostly white households.  

Bar chart showing how household composition by race or ethnicity will change over the next two decades in California, Georgia, California, and Minnesota

Line charts showing how homeownership rates by race or ethnicity will change over the next two decades in Texas, Georgia, California, and Minnesota

Texas: A fast-growing state with high growth in Hispanic households and a high Hispanic homeownership rate

Texas is expected to grow significantly from 2020 to 2040, with the number of households increasing from 10.1 million to 13.2 million, a 31.5 percent increase compared with the national average of 12.4 percent. Texas households were very diverse in 2020: 48 percent of households were white, 13 percent were Black, 32 percent were Hispanic, and 6 percent were Asian and other households. By 2040, we project Texas will be even more diverse: 38 percent of households will be white, 15 percent will be Black, 38 percent will be Hispanic, and 9 percent will be Asian and other households.

Meanwhile, the homeownership rate in 2020 was 62 percent, about 2 percentage points lower than the national average, and is expected to decline to 60 percent. The decline is mostly because households of color have lower homeownership rates. In 2020, the white homeownership rate was 71 percent, the Black homeownership rate was 39 percent, the Hispanic homeownership rate was 58 percent, and the homeownership rate for Asian and other families was 62 percent. For 2040, we project that the homeownership rate for Hispanic people will be roughly constant, and the homeownership rate for white, Black, and Asian and other families will be marginally lower. These trends will produce 1.7 million net new homeowners, comprising 1.05 million Hispanic homeowners, more than 300,000 Asian and others homeowners, more than 200,000 Black homeowners, and just over 100,000 white homeowners. 

Georgia: A fast-growing state with a large share of Black households and steep increases in Asian and Black homeownership

We project the number of new Georgia households will increase from 3.9 million to 4.8 million, a 21.5 percent increase. In 2020, Georgia was composed of 56 percent white families, 31 percent Black families, 7 percent Hispanic families, and 5 percent Asian and other families. By 2040, we expect Georgia to be more diverse: 47 percent of families will be white, 35 percent will be Black, 10 percent will be Hispanic, and 8 percent will be Asian and others.

The homeownership rate in Georgia is expected to fall by 2.6 percentage points overall, from 64.7 percent in 2020 to 62.1 percent by 2040. The change in homeownership rates will differ by race or ethnicity: we project a sizeable increase in the homeownership rate for Asian and other households (from 61.0 to 64.5 percent), a small increase in the Black homeownership rate (from 47.6 to 48.2 percent), no change in the Hispanic homeownership rate (49.7 percent), and a small decline in the white homeownership rate (from 76.6 to 74.8 percent). These trends will result in more than 400,000 net new homeowners: more than 200,000 of them Black homeowners, 100,000 of them Hispanic homeowners, and 100,000 of them Asian and other homeowners, with a small decline in the number of white homeowners.

California: A very diverse state with a slowing household formation rate

The number of California households is expected to increase from 11.5 million to 13.2 million, a 7.3 percent increase that’s much lower than the national average of 12.4 percent. California is now one of the most diverse states: 47 percent of households are white, 6 percent are Black, 30 percent are Hispanic (the second-highest share in the nation, behind Texas), and 17 percent are Asian and other households (the highest share in the nation). By 2040, California households will be more diverse: 37 percent will be white households, 6 percent will be Black households, 36 percent will be Hispanic households, and 22 percent will be Asian and other households. This represents a 6 percent increase in the Hispanic share and a 5 percent increase in the Asian and other share.

Even though the Hispanic and Asian populations will grow as a share of California’s population from 2020 to 2040, the share of Hispanic households living in California is expected to fall from 23.1 to 19.5 percent, and the share of Asian and other households is expected to decline from 25 to 22 percent, because the state is experiencing below-average household formation growth. The homeownership rate in California is low, at 55.8 percent. We project that it will continue to fall to 54.6 percent by 2040. This drop is mostly because the 1.1 percentage-point drop in the white homeownership rate (from 64.0 percent to 62.9 percent). We expect the homeownership rate for Asian and other households to decrease marginally, the homeownership rate for Black households to increase marginally, and the homeownership rate for Hispanic households to increase dramatically (from 45.9 percent to 48.8 percent), closing the white-Hispanic homeownership gap by more than 5 percentage points. These trends will produce 3.7 million net new homeowners: there will be more than 700,000 fewer white homeowners, no change in the number of Black homeowners, 6.7 million more Hispanic homeowners, and 4.2 million more Asian and other homeowners.

Minnesota: A state with increasing racial and ethnic diversity and a narrower white-Black homeownership gap

Minnesota is less racially and ethnically diverse than most other states, with white households composing 84 percent of households in 2020, Black households composing 6 percent, Hispanic households composing 4 percent, and Asian and other households composing 6 percent. By 2040, we project households will be considerably more diverse, with the white share falling to 75 percent, the Black share rising to 10 percent, the Hispanic share rising to 6 percent, and the Asian and other share rising to 9 percent.

The overall homeownership rate in Minnesota is high (71.9 percent) because of the high white homeownership rate (77.6 percent), but the Black homeownership rate is among the lowest in the nation (21.0 percent). This is the largest homeownership gap between white and Black households in any state. We expect this gap to narrow dramatically over the next 20 years, from 56.6 percentage points to 49.3 percentage points, as the Black homeownership rate increases 8.6 percentage points. The number of net new homeowners will be more than 200,000: 40,000 of them white, 50,000 of them Black, 40,000 of them Hispanic, and 70,000 of them Asian and others.

The housing industry will need to adapt to these new trends

Though households in all states are becoming more racially and ethnically diverse, they are starting at different points and moving at different speeds. Similarly, individual states have very different homeownership patterns. These are contained in our state fact sheets, which provide detailed information for future household formation and homeownership. The housing industry and state and federal policymakers need to be aware of these trajectories so they can prepare for and support homeowners of all races and ethnicities.

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Research Areas Housing finance
Tags Racial and ethnic disparities Homeownership Racial homeownership gap
Policy Centers Housing Finance Policy Center