For Single Women, Minorities, Divergent Paths on Homeownership

Two reports show that homeownership opportunities for key segments of the economy—single women and minorities—continue to move in different directions.

Redfin, Seattle, notes while “redlining”—the racist 1930s-era government housing policy that created disparate housing opportunities and lower property values for minorities compared to whites—has long been illegal, its effects are still felt nearly a century later. Its report found the typical homeowner in a neighborhood that was redlined for mortgage lending by the federal government has gained 52% less—or $212,023 less—in personal wealth generated by property value increases than one in a greenlined neighborhood over the past 40 years.

Redfin said black homeowners are nearly five times more likely to own in a redlined neighborhood than in a greenlined neighborhood, resulting in diminished home equity and overall economic inequality for black families. Redlining effectively blocked black families from obtaining loans by assigning low mortgage security ratings to predominantly black neighborhoods and color-coding them in red on maps.

“Though redlining was outlawed in the 1960s, it remains a major factor in today’s wealth gap between black and white families across the country,” the report said. “Lack of access to credit, discrimination against minorities buying homes in greenlined neighborhoods, and being prevented from buying homes in their own neighborhoods led to significantly lower homeownership rates for black families than white families. The national homeownership rate is lower for black families than white families—44.0% versus 73.7%.

“More than half a century after it was abolished, redlining continues to dictate the racial makeup of neighborhoods and black families still feel the socioeconomic effects of such a discriminatory housing policy,” said Redfin chief economist Daryl Fairweather. “Black families who were unable to secure housing loans in the neighborhoods where they lived have missed out on one of the major ways to build wealth in this country. And even families who were able to buy homes in their neighborhood after redlining ended haven’t earned nearly as much home equity as people who bought homes in neighborhoods that were considered more valuable.”

Redfin found since 1980, the homeownership rate for black families in greenlined neighborhoods dropped from 50.4% to just 44%, while the rate for white families rose 4.1 percentage points to 71% in 2017. That makes for a 27 percentage-point homeownership gap between Black and white families in “best” neighborhoods, up from a 16.5 percentage-point gap 40 years ago. The gap has widened in all neighborhood types except those that were formerly redlined, where Black and white families both have relatively low homeownership rates (29.8% and 45.6%, respectively).

“The expanding homeownership gap between black and white families can in part be traced back to diminished home equity due to redlining, as it’s one major reason why black families today have less money than white families to purchase homes either as first-time or move-up homebuyers,” Fairweather said. “It’s important to note that other factors play a role in lower homeownership rates for black families, too. For instance, employment discrimination prevents black workers from earning equitable income.”

The report said in formerly redlined neighborhoods, the typical homeowner has earned $196,050 in home equity since 1980, versus $408,073 for greenlined neighborhoods. Homeowners in former “still desirable” and “definitely declining” neighborhoods have also missed out on sizeable home equity compared to those in greenlined neighborhoods.

Tai Christensen, Director of Government Affairs with CBC Mortgage Agency, Saratoga Springs, Utah, which provides down payment assistance programs, said the lingering effects of segregation and racially biased redlining continues to defer opportunities for homeownership among black Americans. 

“It’s time to create real change by collectively working together to build fair and equal policies that balance the playing field and bring economic and political equity to blacks in America,” Christensen said. “The housing industry can be a leader in beginning to turn the page on systemic racism within our country. Since homeownership is indeed the primary vehicle for building wealth from generation to generation, increasing equitable access to credit for minorities will create integenerational wealth these communities have yet to enjoy. By decreasing the homeownership gap between blacks and whites, one family at a time, we can bring about change to our underserved neighborhoods.”

On the other hand, for single women homeownership increasingly comes first, according to First American Financial Corp., Santa Ana, Calif. Its analysis said following an overall decline in homeownership in the aftermath of the Great Recession to a low point of 63 percent in 2016, the homeownership rate has rebounded significantly to 65 percent in 2019–and single women are a major reason why homeownership has been on the rise since 2016.

First American said in 2019, the homeownership rate for single women (including widowed, separated, or divorced) was 2.2 percent higher than single men, according to anonymized household-level survey data. Differences between how single women and men prioritize homeownership may help explain why the homeownership rate among women exceeds men. One 2018 report by Bank of America found that single women prioritize owning a home more than their single male counterparts (73 percent vs. 65 percent). They’re also prioritizing homeownership over many key life priorities, such as getting married (41 percent) and having children (31 percent). Homeownership is a key tool for wealth creation in the United States, and single women are increasingly choosing to invest in homes and embracing wealth creation through home buying.

“The single female homeownership trend has largely followed the national homeownership rate, increasing in the early 2000s and peaking in 2005, before falling in the aftermath of the recession,” said First American Deputy Chief Economist Odeta Kushi.  

Higher education has played a key role, Kushi said. Citing previous research that higher educational attainment results in higher household income, and higher income improves the likelihood of homeownership. “This remains true among single women – as educational attainment and household income have increased for single women, so has the homeownership rate,” she said. “The homeownership gap between single women with no high school degree or just a high school degree versus those with a bachelor’s degree or higher was 7 percent in the year 2000 and is now 9 percent.”

Kushi added as educational attainment and household income for women continue to rise, “we can expect increased homeownership to follow suit. Getting married and having children have been shown to be key lifestyle decisions that increase the likelihood of homeownership, yet it seems single women are dispelling the traditional notion that buying a home follows love and marriage. As women’s earning power continues to rise, it seems first comes homeownership.”