Millennial's Black Homeownership is Worse Than Any Other Generation

African Americans are trailing their white counterparts in homeownership across age groups at a time when high mortgage rates, elevated prices and stifled supply has made the dream of owning a home out of reach for millions of Americans.

A third of Black millennials—the age group born between 1981 to 1996—own their home compared to two-thirds of white Americans. Meanwhile, for those between 43 and 58 years old, or Gen Xers, the situation is slightly better with 52 percent of Black Americans possessing a property compared to 80 percent of their white counterparts, and for boomers, the data breaks down 60 percent Black homeowners with 85 percent white property owners, according to real estate platform Redfin.

The cost of home loans, which, in the fall of last year, soared to two-decade highs and still hovers around 7 percent—along with the increase in prices due to a limited supply of homes—has made affording a home tough for huge swathes of Americans.

Black Americans have especially struggled in this market, Redfin points out. Only 7 percent of properties available for sale in 2023 were affordable for Black prospective buyers compared to 22 percent of white Americans.

The racial homeownership gap is part of larger disparities seen in the broader American economy. Black Americans earn less on average compared to white employees and have less wealth—for every $100 worth of affluence for white households $100, their Black counterparts have $15. This contributes to challenges in raising the capital necessary to own a home, according to Redfin. Research suggests that Black Americans are more likely to tap into their retirement savings to generate a down payment compared to other demographic groups in the U.S.

The housing market-induced 2008 financial crisis hurt Black Americans more than other groups, decimating their wealth and setting their earnings back, Redfin notes. The mortgage sector reforms that came in as a result of the calamity of those years in turn have made it tougher for current millennials looking to secure home loans.

"Millennials have consistently tracked behind their parents' generation when it comes to homeownership because they've faced significant financial obstacles and an historic inventory shortage," Daryl Fairweather, Redfin's chief economist, said in a statement.

Discriminatory policies from the twentieth century kept Black Americans away from owning property, and that legacy means they lack wealth to pass on to the next generation, stifling their ability to grow into becoming homeowners.

Meanwhile, a recent study by the National Association of Realtors revealed that Black homebuyers are denied mortgages at a higher rate, and when they are able to secure home loans, they tend to receive more expensive terms.

"Young Black Americans started out behind largely because they're less likely to have property and money passed down from their parents or grandparents, who faced racial discrimination themselves," Fairweather said. "They have stayed behind because they're still facing discrimination and unfair economic circumstances."

Over the last three years, when mortgage rates plunged during the COVID pandemic, Black millennials were able to take advantage of lower costs and purchase property, according to Redfin. The economy is doing well which may also help prospective buyers going forward.

"Although young Black Americans face outsized barriers to homeownership, I expect the racial homeownership gap to start narrowing for millennials and Gen Zers in the near future," Fairweather said. "The Black unemployment rate is at an all-time low and the racial wage gap is shrinking, which should help more young Black Americans get their feet in the homeownership door."