Black Americans are still lagging behind their white counterparts in homeownership.
According to a recent report from Redfin, in the first quarter of 2021, the Black homeownership rate was 45.1%, compared to 73.8% for white homeownership. Black Americans are also more likely to make financial sacrifices, like getting another job, to purchase their first home compared to their white peers. Just 14% of Black Americans reported making no financial sacrifices, compared to 23% of white American homeowners.
Sacrifices Black Americans made to afford their first home included working long hours at a job (39%), driving an older vehicle for an extended period of time (27%), taking an extra job (30%), living in a small home for longer (19%), significant other taking a job or extra job (26%) and moving to a less expensive city (24%). Comparatively, white homeowners were more likely to work longer hours (37%), drive an older vehicle for an extended period of time (36%), live in a smaller home for longer (25%) and take an extra job (22%).
Black homebuyers are more likely to be higher earners when purchasing their first home. Twenty-one percent of Black homeowners earned $150,000 or more when purchasing their first home, compared to 11% of white homeowners. More than three-quarters of white homeowners earned less than $100,000 when they bought their first home, compared to 63% of Black homebuyers. Black Americans are also more likely to be denied a mortgage, at 16% compared to 7% for white Americans. However, Black homeowners were more likely to have $5,000 or more in debt when purchasing their first home, at 40% compared to 35% of white homeowners.
Additionally, generational homeownership is a hurdle Black Americans face. Seventy-four percent of Black respondents reported their parents are homeowners, compared to 84% of white respondents, while 67% of Black respondents have grandparents who are homeowners, versus 72% of white respondents.
“Homeownership is closely tied to the American ideal of freedom, and specifically financial freedom,” said Redfin Chief Economist Daryl Fairweather. “The fact that Black buyers report earning more money and making more financial sacrifices to enter the homeowner class is one example of how difficult it is for Black people in this country to achieve the American dream.”