The homeownership rate for Black households has grown faster than average since 2019, but it’s still below the high-water mark reached in 2004, before the Great Recession.

Insufficient credit is holding many Black households back from homeownership. Nearly 1 in 4 mortgage applications from Black borrowers — 24% — are denied, according to 2023 Home Mortgage Disclosure Act data, which can be explored on this interactive Zillow dashboard on housing inequality.

Applicant Ratio

That’s almost twice the rate of all applicants (12.6%) and far higher than the 1-in-10 denial rate for white applicants1. Of those mortgages denied Black applicants, more than 43% are turned down due to credit history – the most common reason given. According to a news release, that’s a higher rate than in past years and also when compared to 32% of denials for white applicants.

“While discriminatory policies like redlining have long been outlawed, the damage from these historic practices is still felt today. Many communities once barred from accessing credit are now finance deserts, with few traditional financial institutions, making it harder to build credit and buy a house,” said Zillow senior economist Orphe Divounguy. “That’s why it’s so important to expand credit access. Allowing rent payments to count in credit scores is one example of how to move the industry forward.”

Some Improvement

Today, nearly 46% of Black households own their home, an improvement from a low point of 43% in 2019, but still down from a 49.7% peak ownership rate reached in 2004, before the Great Recession, and far off from the 74% rate for white households. Many Black families have been left out of major wealth gains during that time. Since the Black homeownership rate peaked in 2004, U.S. home values have more than doubled, rising 117%.

Although the gap between white homeownership rates and those of Black and Hispanic households has diminished since 2019, the deficit is still large and contributes to vast inequalities in wealth.

The single largest asset for most homeowners is their house, a major means of building wealth and passing it on to the next generation. Zillow Research found a $3 trillion wealth gap between Black and white families. Nearly 40% of the gap — $1.18 trillion — could be credited to disparities in home values and ownership.

Still Lower than Average

Despite rising faster than average since 2019, Black-owned home values are still far lower than average. If the typical home was worth $1, Black-owned homes would be worth 85 cents and white-owned homes worth $1.03.

How Zillow leverages technology to understand and address housing inequality and accessibility challenges:

  • Rent payments made to landlords on the Zillow Rentals platform can now count toward a renter’s credit score. Zillow is pushing for systemic, national changes on this front, advocating for bipartisan legislation that would encourage property owners and utility and telecom providers to report payment data to credit reporting agencies. This would give consumers who pay their bills on time the chance to build a positive credit history.
  • Home shoppers can see what down payment assistance programs they could qualify for on every Zillow listing, saving shoppers the hassle of looking up their eligibility on various government websites.
  • Continuing its investment in new technology to address biases and inequalities in housing, Zillow recently released the open-source Fair Housing Classifier. This free and easy-to-access new tool establishes guardrails to help prevent historic biases from resurfacing in real estate conversations powered by large language model (LLM) technology.

For conventional purchases of a primary residence.

Source: Zillow