Black and Latinx Home-Value Gaps Smallest Since 2007
The values of Black- and Latinx-owned homes remain below the average value of all U.S. homes, but those gaps narrowed in 2020, shrinking to levels not seen since the Great Recession, according to an analysis from real estate website Zillow.
The home-value gaps now stand at 16.2% for Black homeowners and 10.2% for Latinx homeowners, according to Zillow. In 2007, those values were at about 15% and 12% below the average U.S. home value, respectively, and over the years, they widened to as much as 20%.
The recently improved home-value gaps are a positive step in closing racial income disparities, but they still exemplify how hard it can be to build wealth and home equity for these groups, Zillow said. Homeownership is the single largest driver of wealth, with the Federal Reserve’s 2019 Survey of Consumer Finances showing that more than 90% of Americans in the top income group own homes. While the average home value in the U.S. in 2020 was $262,604, it was $235,943 for Latinx homeowners and just $219,931 for Black homeowners, according to Zillow.
The shrinking gap helps current Black and Latinx Americans homeowners, but more needs to be done to promote homeownership in general among these populations, according to the Institute on Assets and Social Policy. Only 45% of Black Americans and 47% of Latinx Americans own homes compared to 73% of white Americans, the Institute's Racial Wealth Audit showed. Increasing homeownership among Black and Latinx communities to parity with white homeowners would shrink the overall wealth gap between the races by 31% for each group, the audit said.
During the Great Recession, Black and Latinx homeowners suffered most because predatory loans often took advantage of vulnerable communities and forced foreclosures, according to Zillow. There was some concern that the disproportionate economic hit these communities took during the COVID-19 pandemic would result in another yawning of the gap, but that did not materialize.
"It has taken nearly a decade for the home value gap to return to pre-recession levels, but still, the gap remains very large," Zillow economist Treh Manhertz said in a statement. "There has been reason to worry another dip may be on the horizon that could slow or stop the progress… Thanks to rock bottom rates on the most secure mortgages, extended forbearance programs, and rising home prices, there are no signs of another widening of the gap coming this year.”
But Manhertz warned that “continued vigilance and targeted intervention by policymakers is crucial to keep the progress going for communities of color."