Young couple buying a new house
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For Black America the pursuit of the American Dream through homeownership has never wavered with adults in this demographic between the ages of 26 and 39 sparking a nationwide rise in the overall rate. U.S. Census data shows this group raised the homeownership rate for all Black Americans by more than 2% during the first three quarters of 2020. With nearly $200 billion lost in wealth and equity since the Great Recession, African Americans are at risk to have all median wealth extinguished by 2053, however, this new wave of Black millennial homeownership could change this.
The Breakdown You Need to Know:
CultureBanx noted that homeownership is still one of the main avenues for all Americans to build wealth, as the national rate of Black homeowners stands at 41%. Black millennials are striving to increase this number through reduced personal spending that has allowed wealthy and middle-class Black Millennials to take advantage of record-low mortgage rates in markets where available homes have been relatively scarce. A November National Association of Realtors analysis showed 5% of Americans who bought homes were Black, 1% higher than 2019.
The National Association of Realtors and the National Association of Real Estate Brokers both stated first-time Black Millennial buyers made the bulk of African Americans’ home purchases in 2020, as many left their apartments to purchase homes in suburbs. Moving to the suburbs has become increasingly more diverse, with 39% of African Americans calling the area home in 2014, according to the Brookings Institute. That’s a noticeable shift from 2000, when only 33% of African Americans lived in the suburbs.
It’s important to note that Black Millennials who bought homes in 2020 are not representative of the bulk of Black Americans, whose economic standing has worsened throughout the pandemic. Some economists were concerned whether Black Millennials could even buy homes given their disproportionate rates of student loan debt and other systemic inequities like mortgage bias and redlining.
Racial Real Estate Redlining:
In the past 20 years there has been a catastrophic loss of homeownership in key cities that have large shares of Black homeowners. In Cleveland that’s 53% Black, Baltimore that’s 63% Black, and Philadelphia that’s 44% Black, homeownership has declined 11%, 7% and 3% respectively, and in large part due to redlining, according to Brookings. Until 1968, banks could deny mortgage loans based on a homebuyer’s race or neighborhood, and predominantly white communities could pass zoning restrictions designed to keep people of color out of neighborhoods.
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Government housing policies such as redlining, have had lasting effects, from concentrating poverty, to stifling African American homeownership, and has contributed to the widening racial wealth gap. Even Atlanta Federal Reserve President Raphael Bostic has called out things like the impact of long-outlawed policies including how “redlining” Blacks out of white neighborhoods continues to influence the ability of minority families to amass wealth. Simply put, redlining and other housing policies continue to undermine the accumulation of Black wealth.
What’s Next:
Low mortgage rates and a new cultural emphasis on wealth building among African Americans are all factors driving “mortgage-ready” Black Millennials to buy homes. Those with good credit and steady incomes who are suitable mortgage applicants are purchasing houses in markets where owning a home is often cheaper than renting. Realtors and economists say they expect the Black Millennial home buying trend to continue in 2021.