Snapshot of Race and Home Buying in America

This report looks at homeownership trends, the mortgage market and affordability by race, and home buyer demographics from the 2023 Profile of Home Buyers and Sellers, home buyers and fair housing.

Homeownership in 2022 compared to 2021

• Despite the fast-rising mortgage rates, minority groups increased their homeownership rates in 2022. Nevertheless, the white homeownership rate fell, albeit slightly, breaking the pattern of growth sustained over the last six years.
• Black homeownership rate experienced a modest uptick, reaching 44.1%.
• Hispanic homeownership rate witnessed a considerable rise, attaining a level of 51.1%
• The Asian homeownership rate substantially increased to 63.3%

Homeownership in 2022 compared to 2012

• Compared to a decade ago, homeownership among Americans has significantly increased. Presently, there are approximately 10.5 million more homeowners than in 2012. Homeownership rates have consistently grown across all racial and ethnic groups in the United States.
• Asian Americans have witnessed the most pronounced increase in homeownership, with a remarkable gain of 6.1% - 1.5 million more Asian homeowners compared to 2012.
• The Hispanic homeownership rate has seen an increase of 5.4 percentage points – 3.2 million additional Hispanic homeowners – compared to 2012.
• While the homeownership rate for white Americans has risen by 3.1 percentage points compared to a decade ago, the increase amounts to only 65,000 new white homeowners since 2012. This increase in the white homeownership rate seems to be primarily attributable to the decrease in the white population during the past decade.
• Black homeownership rate increased by 1.6 percentage points during the same period, resulting in nearly 950,000 more Black Americans transitioning to homeownership.
• While homeownership rates have improved across all racial and ethnic categories over the past decade, the homeownership rate among Black individuals continues to trail behind significantly. The Black and white homeownership rate gap continues to be higher than a decade ago, standing at 28 percentage points.

Factors affecting homeownership rate among racial and ethnic groups

Demographic Trends

• Racial and ethnic communities with significant numbers of individuals approaching the median homebuying age could see a rise in homeownership rates. In the coming five years, it is anticipated that 1.5 million Black households, 775,000 Asian households, and 2.2 million Hispanic households will reach the median age for purchasing homes.
• 55% of Asian/Pacific Islander (up from 43% in the 2023 report), 51% of Black/African American (up from 49% in the 2023 report), and 51% of Hispanic/Latino buyers (up from 32% in the 2023 report) were first-time home buyers.
• South Dakota, and Alaska emerged as the states with the highest percentage of Black individuals approaching the median homebuying age.
• Montana and New Mexico are poised for an even more pronounced enhancement of Asian homeownership as more than 20% of Asian households are on the cusp of reaching the age typically associated with home purchasing —43 years in Montana and 40 years in New Mexico.
• New Hampshire and Alabama have the most Hispanic households approaching the typical home purchase age.

Affordability challenges across racial groups

• Among homeowners, data reveals that there is a pattern of higher housing burden among Black and Hispanic homeowners compared to their white and Asian counterparts. In Colorado, 41% of Black homeowners spend more than 30% of their income on housing, compared to 24% of white homeowners.
• The situation is particularly tough for renters, presenting a double bind. Rising rental costs are eating into their disposable income, reducing their financial flexibility and making it harder for them to save for a down payment.
• In 45 of the states across the United States, Black renters face greater affordability challenges than their white counterparts.
• Among states with a low Black homeownership rate, North Dakota, Wisconsin, and Nebraska stand out for having some of the largest disparities in housing affordability between white and Black renters. In North Dakota, only 4% of Black renters can afford to purchase the median-priced home compared to 24% of their white counterparts.
• To address the racial disparities in housing affordability, efforts and policies to increase the availability of affordable housing must be tailored to match the specific buying power of minority groups looking to purchase their first home.
• On a national scale, white renters can purchase homes valued at up to $156,240 without exceeding their budget. Similarly, the highest affordable home price for Black renters is $112,740; for Asian renters, it is $241,370; and for Hispanic renters, $151,720.

Access to credit

Denial rates

• Black and Hispanic applicants experience higher denial rates for mortgage applications compared to their white and Asian counterparts. Data shows that mortgage applications were denied at a rate of 26% for Black and 22% for Hispanic applicants, in stark contrast to the 16% for white and 15% for Asian applicants.
• Mississippi exhibits the highest overall disparity, with Black applicants facing a disparity of 17 percentage points and Hispanic applicants facing a disparity of 8 percentage points compared to the average rate of white and Asian applicants.

Mortgage rates

• The data indicates that mortgages granted to Black and Hispanic borrowers frequently have higher mortgage rates. 20% of mortgages for Black borrowers and 21% for Hispanic borrowers came with mortgage rates exceeding 6%. This contrasts with 18% of white and 15% of Asian borrowers' mortgages having rates above this threshold.
• Consequently, the average mortgage rates for Black and Hispanic borrowers stood at approximately 4.9%, compared to 4.8% for white borrowers and 4.6% for Asian borrowers.
• Montana, Michigan, and Mississippi had the most Black borrowers, with a rate higher than 6%. In Montana, for example, nearly one in three Black borrowers had a rate over 6%

Downpayment sources

• Black/African Americans used 401k/pension (17%) more than any other group, a slight increase from 16% last year; Asian/pacific islanders received gifts and loans from family more than other groups (26%), down slightly from 29% last year.

Student Loan Debt

• 41% of Black/African American buyers (up from 33% last year), and 29% among Hispanic/Latino buyers (down from 46% last year) reported having student loan debt. Black/African American buyers had the largest student loan debt amount of $46,000.

Experience of Racial Discrimination in Real Estate Transactions

• 39% of Black/African American buyers reported steering towards or away from a specific neighborhood, up from 12% last year. 31% of Asian/pacific islander buyers reported steering towards or away from a specific neighborhood, up from less than 1% last year.
• Nearly half of Black/African American, Asian/pacific islander, and Hispanic/Latino buyers reported the discrimination they faced in a real estate transaction to a government agency.

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