Racial Inequities in Household Wealth

This is the second chapter of Chandan Economics's 2024 special report on Racial Inequities in US housing that explores economic performance outcomes in housing by race in housing affordability, household wealth, housing and environmental quality, and credit access.

When it comes to sizing up the racial wealth gap, there is no shortage of quantifying methods. However, given how income and asset building play a significant role in upward mobility, measuring household wealth gives us a metric that reflects economic effects on current and future generations.

According to a 2019 paper by Opportunity Insights, Black Americans and Native Americans have significantly lower rates of upward mobility than White Americans, contributing to an intergenerational wealth gap. The impact of the persistent racial wealth gap stretches beyond economic outcomes, affecting environmental quality, crime, and health outcomes in minority-majority areas.

The Homeownership Gap

The homeownership gap between Whites and Minorities is an important metric that underscores the multi-generational challenge of reducing racial disparities in wealth. According to Chandan Economics' calculations of data from the 2022 American Community Survey (ACS), just 43.2% of Black households were homeowners compared to 72.2% of White, non-Hispanic households— a racial disparity gap of 29 percentage points.

White, non-Hispanic households are the only group with an average homeownership rate above the national mean of 65.3%. Racial disparities in homeownership rates are less pronounced than disparities in affordability but persist. 62.4% of Asian American or Pacific Islander households are homeowners, while Native American (57.0%) and Multiracial households (56.0%) sit slightly lower. Hispanic households and all other racial groups hold homeownership rates closer to the bottom of the distribution, charting at 51.7% and 48.5%, respectively.

Despite the dismantling of many discriminatory lending and underwriting practices over the last several decades, the gap between White and Black homeownership remains as wide today as it did before the civil rights era. In 1960, the White homeownership rate was 65%, and the Black homeownership rate was 38% — a 27 percentage point gap.

In the decade following the Great Financial Crisis (GFC), homeownership rates broadly declined across all races and ethnicities. Still, the gap widened as Black and non-White Hispanic households were more than twice as likely as White households to receive a sub-prime loan during the housing bubble — exacerbating the crisis's impact in minority-majority communities.

The homeownership gap between Whites and minorities has declined modestly during the pandemic years, driven partly by the wage increases and location flexibility brought forward by pandemic effects. However, through the end of 2023, a 27.9 percentage point gap remains between the top and bottom of the homeownership distribution — offering sobering evidence of America's tepid progress on racial disparities in wealth.