Values of Black-owned homes rose the fastest during the pandemic
Relative to overall home values, Black home values fared well in recent years according to Zillow data. But the racial homeownership gap remains wide.
- Black-owned home values appreciated 42.3% during the pandemic, compared with 38.2% for overall home values.
- While home values have improved, the Black homeownership rate continues to lag behind, falling below 1960 levels.
- Improving access to traditional financial services can help reduce the racial homeownership gap
While Black homeownership remains disproportionately low, a new report finds that Black families are making gains in home values.
According to Zillow research, in the past decade Black home values increased faster than home values overall, providing a major boost for household wealth. This was particularly true during the pandemic: Black home values appreciated 42.3% from just before the pandemic to January 2023, compared with 38.2% for overall home values and 37.8% for white home values, according to the report.
The increase has helped close the gap in home values, but it remains wide. Nicole Bachaud, senior economist at Zillow, estimated that in January, the typical Black-owned home was worth 85.2% of the value of a typical home overall, up from 82.7% before the pandemic. It's the closest Black home values have come to overall values in decades.
"That amounts to an increase of nearly $84,000 in equity for the typical Black homeowner over this period, substantially increasing wealth for Black homeowners," Bachaud said.
While home values have risen, Black homeownership continues to lag behind, and has even lost ground. Analyzing U.S. Census data, the Pew Charitable Trusts found that the gap between white and Black homeownership is wider than it was in 1960. In looking at current numbers, 74.6% of white households owned their homes in 2022, compared with 45.3% of Black households.
"To see the Black homeownership rate lower than the generation before is shocking, considering what earlier generations faced," said Janneke Ratcliffe, vice president of the Housing Finance Policy Center at the Urban Institute in Washington, D.C., in the Pew report.
Zillow's analysis found that some regions of the country saw more gains in Black homeownership than others. The Midwest, particularly Detroit, Kansas City, Chicago, Cleveland, Milwaukee and Louisville, saw the biggest increases. The West Coast didn't fare as well.
"Markets that have historically had a smaller share of Black residents and more expensive home values saw the gap between Black home values and home values overall widen since the start of the pandemic," Bachaud said, noting that San Francisco, a metro area where only around 8% of the population is Black, saw the ratio of Black home values to overall home values drop 3.6 percentage points since February 2020.
Bachaud said improving access to traditional financial services can help reduce the racial homeownership gap. The Urban Institute has also been doing research on how some innovations in underwriting can also help close the gap.
"This progress in improving Black homeownership and household wealth is long overdue, yet there is so much work left to be done," Bachaud said. "It's imperative that progress continues to be made to ensure that future shocks to the housing market don't knock back the forward momentum picking up steam now."