Understanding and Closing the Racial Homeownership Gap

Real Estate Professionals Are Key in Closing the Homeownership Gap

As a real estate agent, a significant part of your job is ensuring safe, inclusive, and equitable access to homeownership. Rules and regulations like the Fair Housing Act and resources such as the National Association of REALTORS® (NAR) Code of Ethics have ushered in progress within the housing industry, but the unfortunate reality is that homeownership still isn’t accessible for all. Here, we’ll walk through the history of the Fair Housing Act and the homeownership gap so that agents can better understand the challenges their clients face, and do their part in evening the playing field.

What Is the Fair Housing Act?

The Fair Housing Act prohibits discrimination by direct providers of housing (including landlords and real estate companies as well as other entities) whose discriminatory practices make housing unavailable to persons because of:

• Race or color

• Religion

• Sex

• National origin

• Familial status

• Disability

What Is the Homeownership Gap?

The homeownership gap refers to the sizable difference in homeownership rates of BIPOC (Black, Indigenous, and people of color) and White Americans. Statistically, White Americans see the highest rates of homeownership at 74.4%, followed by Asian, Native, Hawaiian, and Pacific Islanders at 62.7%, and Hispanic Americans at 48.8%. Black Americans see the lowest homeownership rate at 46.4%.

Though homeownership gaps are nothing new, this 30-point difference between Black and White homeownership rates is one of the largest disparities in history. In fact, today’s housing gap is larger than it was when blatant housing discrimination was legal.

So, why is the housing gap larger than ever, despite federal anti-discrimination laws, better financial aid resources for first-time homeowners, and anti-discriminatory practices in real estate? Let’s dive in to a few of the factors at play.

Causes of the Homeownership Gap

The homeownership gap has existed for as long as BIPOC have been able to own property in the United States. Factors like redlining, racial steering, and economic crises have contributed to this disparity.

What Is Redlining?

A significant portion of the current homeownership gap can be attributed to redlining, or the discriminatory practice of withholding financial services from residents of designated areas based on their race or ethnicity. Redlined areas are most often minority neighborhoods.

Redlining originated in the mid-1900s and consisted of the systematic denial of home loans, insurance policies, and other services regardless of the applicant’s objective qualifications or eligibility. Red lines were drawn around these “less desirable” neighborhoods, leading White families to move to the suburbs in record numbers, while minority families lost out on homeownership and the development of intergenerational wealth. While the adoption of the Fair Housing Act sought to correct this disparity, much of the damage had already been done.

What Is Racial Steering?

Racial steering is another industry-wide issue that has negatively impacted minority homeownership rates. It happens when real estate agents direct buyers to or away from specific neighborhoods based on their race or ethnicity, whether consciously or unconsciously. Despite rules and regulations put in place to prevent racial steering, the practice persists.

As an agent, it’s helpful to be aware of practices like these so that you can more consciously avoid them in your own work with clients.

How Do Economic Crises Affect the Homeownership Gap?

The housing crisis of 2008 was yet another setback for minority homeowners. Due to a disproportionate amount of adjustable-rate mortgages awarded to minority homeowners prior to the housing and employment crisis, Black Americans lost half of their wealth. These rate adjustments (think 50% increases) led to Black homeowners continually refinancing their homes, thus diminishing equity.

What Is Gentrification?

Gentrification is the practice of neighborhood change, often through real estate investment and an influx of higher-income residents, which disproportionately affects neighborhoods historically inhabited by minorities. These changes cause prices to increase at a disproportionate pace, often displacing older residents of color.

How Real Estate Agents Can Help Close the Homeownership Gap

While the situation may seem bleak, progress is happening across the nation. As a real estate professional, you can do your part to help equalize homeownership.

Get Familiar with Minority Grant Options

You may also want to familiarize yourself with the personal finance scene in your local market. Many lenders, including banks and credit unions, provide grants and other incentives aimed at raising minority homeownership rates and closing the homeownership gap. Developing relationships with local lenders and staying apprised of their offerings could present life-changing opportunities for your clients of color.

Don’t discount individual action, either. Seek out a meaningful volunteer opportunity, offer to speak about homeownership at the local high school, donate funds, or even simply make a point to shop with and support minority-owned businesses. At the end of the day, we will all need to play a part in closing the homeownership gap and ensuring homeownership is truly for everyone.

Stay Up-to-Date on Your Trainings

Starting January 1, 2025, REALTORS® are required to complete Fair Housing / Anti-Bias Training upon becoming a National Association of REALTORS® (NAR®) member, and every three years thereafter, coinciding with the Code of Ethics training timeline. This requirement is in addition to the Code of Ethics training, and must meet specific learning objectives and criteria established by the National Association of REALTORS®.

Ready to Get Started with The CE Shop?

When it comes to completing your Fair Housing and Anti Bias Training (or, ahem, any other CE training), you’re in the right place. The Upholding Fair Housing Laws course is your two-hour ticket to ride, checking the box on your requirements and equipping yourself with all the skills you need to be a rockstar, unbiased agent. Select your state in the drop-down menu to find your course!