https://www.essence.com/news/money-career/zillow-homeownership-racial-wealth-gap/

Family with one child viewing potential new home withsenior estate agent, father talking to agent while mother and son look out of window of spacious empty room, real estate, new life, beginnings By Jasmine Browley ·Updated February 28, 2024

The American Dream may be a bit more equitable than we thought, according to a new report from Zillow.

Homeownership, one of the most touted bastions of wealth-building, has notoriously been more challenging for Black Americans than white Americans. But new data from Zillow suggests the gap between the share of Black and white renting families that could comfortably afford a mortgage payment shrunk significantly during the pandemic.

The report points out that in 2022, nearly 40% of 138 million U.S. families didn’t own homes—of those, more than 6.3 million families were considered “income-ready” for a mortgage, or in other words ready to make a purchase if they chose to do.

Just 7.8% of Black families were income-ready for a mortgage, compared to 12.5% of white families — a gap of 4.7 percentage points. This gap has closed by significantly since it stood at 7.9 percentage points since 2012.

“Despite the significant decline in mortgage affordability in the past two years, millions of families who do not own their home have the means to afford the largest share of a homeowner’s cost — the mortgage,” said Zillow Senior Economist Orphe Divounguy in a news release. “While some families may choose to rent, many are simply constrained. It’s crucial to recognize the existence of additional barriers beyond monthly cost, including access to funds for a down payment and closing costs — as well as other barriers that significantly contribute to mortgage denials, like insufficient credit scores and lack of access to credit. These barriers especially impact people of color.”

While there has been improvement in closing the racial homeownership gap, it is still marginal. Across the U.S., homeownership among white families sits at 73% as compared to Black households (44%). This is also compounded by the pervasive racial wealth gap. As the Brookings Institute reports, between 2019 and 2022, for every $100 in wealth held by white households, Black households held only $15.

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