During the pandemic, Black and Hispanic homeownership rates increased by 2 and 2.5 percentage points, respectively, surpassing the white homeownership rate, which increased just 1 percentage point.
While the historically low mortgage rates enabled high-earning, highly educated borrowers across all racial and ethnic groups, it was especially instrumental in boosting homeownership rates among Black and Latino households, according to an analysis by Urban Institute.
From 2019 to 2021, the homeownership rate for Black households went up from 42% to 44%; for white households it went up from 72% to 73%; and for Hispanic households it climbed up from 48.1% to 50.6%.
In fact, after experiencing a continuous decline since the Great Recession, the Black homeownership rate finally made gains between 2019 and 2021.
But the current high mortgage rates and inflation threaten to reverse the trend, according to the analysis.
Young, high-earning Black and Latino households buy homes
The share of homebuyers under the age of 45 increased from 51% in 2019 to 55% in 2021, across all racial and ethnic groups. This change was largest for Black homebuyers younger than 45, whose share increased by 5.3 percentage points, compared with a 4 percentage-point increase for Latino homebuyers and a 3.5 percentage-point increase for white homebuyers.
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In general, households with high incomes and high educational attainment were more likely to access homeownership, with the share of loans made to borrowers with annual incomes above $75,000 increasing by nearly 4 percentage points. The growth in the shares of Black and Latino borrowers with incomes above $75,000 outpaced that of white borrowers, but most high-income white households were already homeowners, which partially explains the smaller magnitude of growth, according to the analysis.
“The reason we saw this increase in Black and Hispanic households becoming home buyers is because of a lot pent-up demand. There's been a huge delay in home ownership among the younger generation. So finally with the rate declined, a lot of people finally, were able to afford to enter into homeownership,” says Jung Choi, a researcher at the Urban Institute. “Among like Black and Latino homebuyers, the competition shifted towards higher income, higher educated population.”
For households with incomes from $100,000 to $149,999, the Asian homeownership rate is 66%, compared with 83% for white households, 68% for Black households, and 67% for Hispanic households. Part of this is due to the fact that white families have a greater ability to help with down payment assistance due to generational wealth.