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Folks who purchased homes in primarily Black neighborhoods in 2019 gained a median of $59,000 in home equity last year, compared to $50,000 for people who bought homes in primarily white neighborhoods, according to a report from Redfin. The report also revealed that folks who purchased a home in primarily Asian or Hispanic neighborhoods saw an increase of $79,000 and $67,000 respectively.
With Black homeowners gaining more wealth through home equity than white homeowners last year, the trend is a reversal from the previous decade, when homeowners of color saw their home values and home equity recover more slowly from the Great Recession.
People who bought homes in primarily Black neighborhoods in 2019 currently have a median of $89,000 in home equity, the smallest amount of the four races included in this analysis. That's compared with $257,000 for Asian homeowners, $113,000 for white homeowners and $102,000 for Hispanic homeowners, according to the report.
"Black homeowners benefited from 2020's hot housing market, and the trend is continuing into this year as Americans remain intensely interested in relocating and buying homes and home values continue to rise," said Redfin chief economist Daryl Fairweather. "But less than half of Black Americans own the home they live in, so most of the Black community didn't benefit from the enormous wealth homeowners have gained in the past year. Especially compared with the three-quarters of white Americans who own their homes, the total benefit for Black families across the country is relatively small. With higher unemployment rates and less overall wealth, Black families were not as likely as white families to buy homes even when prices were comparatively low."
"Now that prices are so high and the pandemic has contributed to high unemployment, especially for Black workers, it's even more difficult for people who don't already own homes to break into the housing market," Fairweather continued. "There is a major need and a big opportunity for policymakers to enact programs like down-payment assistance and zoning reform to help narrow the homeownership gap and enable more Black families to build wealth through home equity."
The report also points out that even though Black homeowners still have less equity than white homeowners, the gap between Black and White Americans is narrowing. This is being attributed to the large increases in home values, as they affect the increase in equity above the initial down payments, as well as equity gains from 2019 to January 2021 for homeowners of all races.
Click here to read more from the report.