Zillow: Black Homeownership Rate Rises, But Has Not Returned to Prior Peak

(Illustration courtesy of Zillow)

Zillow, Seattle, said the homeownership rate for Black households has grown faster than average since 2019, but it remains below the high-water mark reached in 2004, before the Great Recession.

“Insufficient credit is holding many Black households back from homeownership,” Zillow said in a new look at housing inequality. It noted nearly one in four mortgage applications from Black borrowers are denied according to 2023 Home Mortgage Disclosure Act data.

The mortgage denial figure is nearly twice the rate of all applicants (12.6%) and far higher than the one-in-10 denial rate for white applicants, Zillow noted. Of those mortgages denied Black applicants, more than 43% are turned down due to credit history – the most common reason given.

“While discriminatory policies like redlining have long been outlawed, the damage from these historic practices is still felt today,” Zillow Senior Economist Orphe Divounguy said. “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. That’s why it’s so important to expand credit access.” He suggested allowing rent payments to count in credit scores would help to move the industry forward.

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 and far from the 74% rate for white households, the report said. This means many Black households 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 wealth inequality, Zillow said. A house represents the single largest asset for most families and a major means of building wealth to pass on to the next generation. Zillow found a $3 trillion wealth gap between Black and white families. It said nearly 40% of the gap — $1.18 trillion — could be credited to disparities in home values and ownership.