In 1960, 65 percent of white Americans owned a home versus only 38 percent of Black Americans. The 27-point difference between the two is called the Black Homeownership Gap. Despite the passing of the Fair Housing Act of 1968, which abolished discriminatory practices within the housing industry, the homeownership gap between white and black households instead increased to 30 points by the end of 2020. This is concerning.
With home prices skyrocketing and predicted interest rate increases, the black-white homeownership gap will reach crisis levels in Nashville if we continue down the same path. While having access to safe & secure housing for all should be a top priority, history tells us the wealth gained through homeownership can be a long-term solution for creating more sustainable, stable and equitable communities.
Most people think the drivers of the racial wealth gap include family financial support, unemployment, college-educated status, and household income. These are indeed, very significant factors. However, the primary driver of wealth in the United States has been and will be homeownership.
A Survey of Consumer Finances in 2019 found that an average homeowner has forty times the household wealth of a renter. The difference is mind-blowing: $254,900 net worth for the homeowner versus $6,270 for a renter. For most of these homeowners, the majority of their net worth was tied to the value of their homes.
Because renters do not benefit from home price appreciation or equity gains generated by their house payment, they don’t capture the same wealth as their home-owning counterparts.
While some programs have increased Black homeownership rates, according to Steve O’Connor of the Mortgage Bankers Association, they have not effectively resolved key issues in the market: knowledge, trust, and resources.
Many people who are financially eligible for homeownership think they have to have a higher credit score and a 20 percent down payment in order to purchase a home. These and other misconceptions about the requirements, often deter people from buying a home.
The lack of trust stems from the historic exploitation of Black Americans, especially when it comes to housing. The gap in resources is highlighted by the low use of tools that are provided to both consumers and real estate professionals. For example, many loan officers, agents and counselors are unable to recommend assistance programs to homebuyers because they do not always know they are available. Here in Nashville, the lack of resources includes a lack of homes for sale, especially at entry-level prices.
This past year, Greater Nashville Realtors reaffirmed our commitment to being an essential partner in shaping healthy, dynamic neighborhoods in which all individuals, families and businesses can thrive. This effort will truly take everyone. Imagine how many lives would be changed if everyone in Nashville benefited from generational wealth. You can read Greater Nashville REALTORS® diversity, equity and inclusion commitment statement at greaternashvillerealtors.org/pages/dei-vision/
We are calling for all hands on deck to tackle this housing crisis. Will you join us in the fight for homeownership and equity for all?
Steve Jolly is President of Greater Nashville Realtors. A Realtor is a member of the National Association of Realtors who subscribes to its strict code of ethics. You can reach Steve at 615-519-0983 or Steve@NashvilleRealEstateNow.com
