Why LGBTQ+ Homeownership Is Below the National Average

Despite challenges to the homebuying process, organizations can help

two women standing in front of a house holding hands

The Balance / Julie Bang

The homeownership rate among those ages 22 to 72 who identify as LGBTQ+ is just 49%, compared to the overall U.S. general population homeownership rate of 65%, according to data from Freddie Mac and the U.S. Census Bureau. Why? Biases and discrimination within the housing and real estate industries can make it more difficult for members of the LGBTQ+ community to buy homes.

Daniella Flores, a software engineer who identifies as nonbinary, can speak to the truth of the statistics. In 2020, while the COVID-19 pandemic was ever-present, Flores moved from St. Louis, Missouri, to Port Orchard, Washington, with their wife. When they arrived in Washington, the couple was navigating together the new homebuying landscape of Zillow listings and virtual home tours for the first time—Flores as a first-time homebuyer and their wife as a second-time buyer.

The couple ran into problems right off the bat when speaking to a prospective real estate agent.

“I said the word ‘wife’ several times, but he kept referring to us as sisters,” Flores said in a phone call with The Balance. “I thought, ‘I’m not comfortable working with this person … if they’re not going to listen about this, they’re not going to listen about anything else that we want.'" That was just one of several issues the couple ran into throughout the house-hunting process.

This type of experience is reflective of the prejudices LGTBQ+ homebuyers may face. Below is a deeper look at the major challenges individuals in this community may encounter when buying a home, and resources that can help along the way.

Key Takeaways

  • The homeownership rate among those between ages 22 and 72 who identify as LGBTQ+ is 49%, compared to the overall U.S. general population homeownership rate of 65%.
  • Widespread discrimination within employment, health care, and housing has made it more difficult for LGBTQ+ prospective homeowners to afford and secure property.
  • Transgender and nonbinary homebuyers who change their first names often face challenges transferring their credit reports, which can cause them to lose years of credit history.
  • The most LGBTQ+-friendly states are often more expensive, so homebuyers may have to settle for locations with fewer protections in place.

Discrimination

More than one in three LGBTQ+ Americans reported facing discrimination of some kind in 2020, including more than three in five transgender Americans, according to the Center for American Progress’s annual survey. Often, this discrimination can negatively impact their finances.

Discrimination in the U.S. workplace has created a wage gap where LGBTQ+ employees earn about 90 cents for every dollar that the typical worker earns. This gap widens for LGBTQ+ people of color, transgender women and men, and nonbinary individuals.

The transgender population is most likely to be disproportionately affected by health-care-access limitations and costs, increasing their need to pay out of pocket for care. According to the National Center for Transgender Equality, 25% of respondents experience a problem with their insurance directly related to being transgender, such as being denied coverage for care related to gender transition.

When it comes to housing, although there are federal laws in place to protect LGBTQ homebuyers from discrimination, acts of discrimination still occur.

“Unfortunately, a large part of it is going to be with the real estate community,” said Anita Blue, Realtor and vice president of the LGBTQ+ Real Estate Alliance. “There are actually Realtors out there who do not want to work with the LGBTQ+ community.”

A recent survey of LGBTQ+ Real Estate Alliance members found that nearly 20% of respondents have experienced “high levels of unconscious bias within their local real estate industry.” The survey also found that more than 20% of Alliance members said real estate agents were the top culprits of housing discrimination against LGBTQ+ people.

In 2021, the Department of Housing and Urban Development (HUD) announced that LGBTQ+ Americans are protected under the Fair Housing Act. It advised that the act’s prohibition of discrimination on the basis of sex includes sexual orientation and gender identity.

Blue said that it’s not just real estate agents who may discriminate against LGBTQ+ homebuyers. In all steps of the homebuying process, it can be tough to find professionals who are willing to work with members of the LGBTQ+ community and/or find those who understand those members’ needs.

Blue also noted that the protections in place for LGBTQ+ homebuyers—and recourse for those who experience discrimination—varies by state. Maine and California, for example, have state laws that explicitly prohibit discrimination based on sexual orientation and gender identity, whereas Texas and Indiana do not.

Credit History

Major credit bureaus have easily accommodated last-name changes on credit reports in the case of marriage, divorce, or other circumstances. Changing legal first names with the bureaus, however, has historically been a taxing process for trans and nonbinary consumers.

To initiate a name change, individuals must explain to their creditors why they wish to do so. When this happens, the credit history under their deadname (their name given at birth) often fails to transfer, according to nonprofit Center for LGBTQ Economic Advancement & Research. The common result: blank credit reports and the inability to generate an accurate credit score under their current name, or even multiple credit reports.

When Flores and their wife attempted to secure a mortgage, Flores’ wife saw strange changes to her credit. “We called all three credit bureaus,” Flores said. “We faxed them the paperwork showing the legal name change to get them to try to update things.” Yet when their credit union attempted to run a credit check, it would continually come back as inconclusive.

Flores eventually found a workaround for their wife by adding her as an authorized user on Flores’ credit cards. Even so, it wasn’t enough to generate a strong credit history that would allow them to co-borrow a mortgage loan—despite the fact that her score under her deadname was in the 800s. The lender advised that they could submit a joint application, which would result in a worse interest rate and higher payments, or Flores could apply on their own. The couple opted for the latter.

As protective legislation for the LGBTQ+ community has increased, so has awareness among the major credit bureaus. Eric Ellman, senior vice president of public policy and legal affairs at the Consumer Data Industry Association (CTIA), which represents the credit bureaus, explained that both the CTIA and the credit bureaus have pushed out additional guidance for consumers going through a first name or middle name change—primarily transgender and nonbinary consumers—to let them know the steps involved for alerting the credit bureaus directly.

Consumers can find information on the name-change process on each national agency’s website: Equifax, Experian, and TransUnion. Before requesting a name change, consumers must first obtain a legal name change through the state and local court systems.

“A name change is worthy of celebration, and the credit bureaus want to take part in that celebration,” Ellman said. “So we want to do everything that we can to make the process as quick and as painless as possible, so that the transgender and nonbinary community can get their name change, get the credit that they're looking for, and and go on celebrating the new them.”

Homebuying Location

Safety and security are also major concerns for LGBTQ+ homebuyers. Fifty-five percent of LGBTQ+ respondents in a survey conducted by Realtor.com said they wouldn’t buy a home if they were unsure about being accepted in the community.

Further, many prospective homeowners in this community prefer to buy in a state where laws support LGBTQ+ rights. In fact, that was one of the main reasons why Flores wanted to move to the Pacific Northwest. “We can change the gender markers on our driver’s license here, and we couldn’t do that in Missouri,” Flores said. “Health care is a big driver for us, too, with Washington having a law that prohibits health insurance discrimination based on sexual orientation and gender identity.”

According to Safehome.org’s 2021 LGBTQ+ State Safety Rankings Report, the top five safest states for members of the community are California, Vermont, Maryland, Washington, and Illinois. The five least-safe states are Montana, Georgia, Kansas, South Dakota, and North Dakota.

While safety is a key factor, depending on the state, some prospective buyers may be priced out of more LGBTQ+-friendly states. For instance, states such as California and Maryland rank highest on the Cost of Living Index, while states such as Kansas and Georgia are the most affordable.

How Race Compounds These Issues

It’s important to note that the challenges faced by LGBTQ+ homebuyers are often intensified for those individuals who are also Black, Indigenous, or people of color (BIPOC).

The average Black and Hispanic or Latino household earns about half as much as the average White household (regardless of sexual orientation) and owns about 15% to 20% as much net wealth. The homeownership rate for Black members of the LGBTQ+ community is also far below the community as a whole, at 30% compared to 49%. For Latinos, it’s 35%.

The Center for American Progress found that 55% of Black LGBTQ+ individuals reported that discrimination has negatively affected their ability to rent or buy a home to some degree, compared to that of 32% of White LGBTQ+ respondents.

Resources for LGBTQ+ Homebuyers

Despite the challenges members of the LGBTQ+ community face, there are organizations and resources available to help everyone pursuing homeownership.

Blue said that when choosing a real estate or housing professional to work with, it never hurts to ask if they’re LGBTQ+-friendly upfront. Although acceptance is growing with every generation, there still are people out there who hold biases. “Get that out of the way in the beginning,” Blue said, as it can save you time and frustration.

Referral networks can help you find the right person, too. The LGBTQ+ Real Estate Alliance, for example, can help connect homebuyers with agents, brokers, movers, financial planners, and more (see the directory here). Also ask your personal connections for recommendations.

Blue said that it helps to get familiar with your state’s fair housing laws and know where to report illegal instances of discrimination. According to HUD, anyone who experiences housing discrimination based on their actual or perceived sexual orientation or gender identity has a right to file a complaint and assert their rights under the Fair Housing Act. If you experience this, you should file a complaint as soon as possible, as there are time limits on when a complaint can be filed.

If you have legal questions, consider contacting the the following organizations:

“We deserve to be respected as a community,” Blue said. “We deserve the right to be homeowners and shouldn't have to face these types of challenges.”

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Article Sources

  1. Freddie Mac. “The LGBT Community: Buying and Renting Homes,” Page 3.

  2. U.S. Census Bureau. “Quarterly Residential Vacancies and Homeownership, First Quarter 2022,” Page 1.

  3. Center for American Progress. “The State of the LGBTQ Community in 2020.”

  4. Human Rights Campaign. “The Wage Gap Among LGBTQ+ Workers in the United States.”

  5. American Medical Association. “Issue Brief: Health Insurance Coverage for Gender-Affirming Care of Transgender Patients,” Pages 1-2.

  6. National Center for Transgender Equality. “The Report of the U.S. Transgender Survey,” Page 10.

  7. LGBTQ+ Real Estate Alliance. “Discrimination and Its Impact on LGBTQ+ Community: Real Estate Professionals and Consumers,” Page 2.

  8. LGBTmap.org. “Movement Advancement Project | Nondiscrimination Laws.”

  9. The Center for LGBTQ Economic Advancement & Research. “[FYI] Trans and Nonbinary Folks Can Start Changing Their Names on Credit Reports.”

  10. Equality California. “145 LGBTQ+, Business and Consumer Organizations Urge Credit Bureaus To Fix Reporting Problems for Transgender and Nonbinary People.”

  11. Equifax. “File a Dispute on Your Equifax Credit Report.”

  12. Realtor.com. “Realtor.com and LGBTQ+ Real Estate Alliance Survey Shows Housing Discrimination Remains an Issue.”

  13. Washington State Human Rights Commission. “Guide to Sexual Orientation and Gender Identity and the Washington State Law Against Discrimination.”

  14. Safehome.org. “Safehome.org's Annual LGBTQ+ State Safety Rankings: 2021.”

  15. Missouri Economic Research and Information Center. “Cost of Living Data Series.”

  16. The Federal Reserve. “Wealth Inequality and the Racial Wealth Gap.”

  17. Freddie Mac. “LGBT Homeownership Rates Lag Behind General Population.”

  18. Center for American Progress. “Black LGBTQ Individuals Experience Heightened Levels of Discrimination.”

  19. U.S Department for Housing and Urban Development. “Housing Discrimination and Persons Identifying as Lesbian, Gay, Bisexual, Transgender, and/or Queer/Questioning (LGBTQ).”

  20. U.S.  Department for Housing and Urban Development. “File a Complaint – Main Page.”