Zillow: Racial Home Value Disparities Shrinking, But Persist
Zillow, Seattle, said typical values for Black- and Latino-owned homes still lag behind overall U.S. home values, but the gap is narrowing.
The Zillow analysis said homes owned by Black and Latino households are worth 16.2% and 10.2% less, respectively, than the typical U.S. home — gaps that have closed by about 4 percentage points from their widest points following the Great Recession. Homes owned by non-Hispanic white and Asian families, meanwhile, have typical values 2.9% and 3.7% higher than the typical U.S. home.
Before the Great Recession, the gap between Black-owned home values and all home values was nearly 15%, but grew to 20% by March 2014. Similarly, Latino-owned homes saw the largest home value gap in May 2012 at 14% — 2 percentage points larger than before the housing bubble. Now, nearly a decade later, home values for Black- and Latino-owned homes are back at pre-bubble levels, and continue to narrow despite the current economic crisis.
“It has taken nearly a decade for the home value gap to return to pre-recession levels, but still, the gap remains very large,” said Zillow economist Treh Manhertz. “With Black and brown communities and jobs hit disproportionately hard in the pandemic, there has been reason to worry another dip may be on the horizon that could slow or stop the progress. However, this is not the case, as the same factors that widened the gap in the Great Recession are not surfacing this time. Thanks to rock bottom rates on the most secure mortgages, extended forbearance programs, and rising home prices, there are no signs of another widening of the gap coming this year. However, through these turbulent times, continued vigilance and targeted intervention by policymakers is crucial to keep the progress going for communities of color.”
Zillow noted one reason for the wide gap is that the housing bust hit communities of color especially hard. Subprime loans were targeted to take advantage of the most vulnerable communities, and the ensuing wave of foreclosures hurt homeownership and home values disproportionately for Black and Latino homeowners. Fast forward 12 years, and homeownership rates and home values are still recovering for these communities. While home value growth turned positive for U.S. homes in August 2012, it took an additional two years for Black and Latino homes to see this same growth.
The analysis said home value inequality varies greatly in different states and metropolitan areas. Large metros with the smallest spread between Black-owned home values are Riverside (1% value gap), San Antonio (3%), Las Vegas (3%), and Portland (4%). Among the most unequal are Detroit (46% value gap), Buffalo (43%) Birmingham, Ala. (43%), St. Louis (41%) and Milwaukee (40%).
