According to a report from the Urban Institute, Black and Hispanic homeowners have more barriers standing in their way than their white counterparts do when it comes to reaping all the benefits of homeownership.
The report stated that Hispanic households on average only have around 63% of the equity of white households. Even lower, Black households only hold about 50% of the equity of white ones.
Urban Institute stated that the fact that homeowners of color have less housing equity cannot only be attributed to economics. While 'the typical household of color has less income and less wealth than the typical white household' and things like financial assets and intergenerational wealth play into this equity gap, systemic discrimination is also a contributor.
'For example,' the report says, 'When looking to buy a home, minorities were significantly more likely to be steered towards more disadvantaged neighborhoods by their real estate agent, despite being virtually identical to white buyers.'
Racial bias in appraisals was also cited as a factor: 'Some appraisers use a neighborhood's racial and ethnic composition as a proxy for other measures used to determine home values, perpetuating structural barriers and racial disparities.'
The Urban Institute made a few recommendations that could work to make this equity gap smaller. They suggest reforming local land use and the zoning laws that enforce racial segregation, expanding down-payment assistance (DPA programs), strengthing pre- and post-purchase counseling, and developing financial products for home maintenance, repair, and improvement.
Miki Adams, CBC Mortgage Agency's executive vice president, told MPA Magazine that expanding DPA and strengthening pre- and post-purchase counseling are two important steps to take to address this issue.
'When we talk about down-payment assistance and strengthening pre-purchase and post-purchase counseling, those are huge,' she said. 'The biggest challenge for minority homeownership is coming up with the down payment and understanding what goes into owning a home. '¦ Quality counseling early on in the mortgage process is very important, and providing continued support after the mortgage closes is critical.'
Ultimately, changes need to be made in order to see a difference and fix these disparities. 'I think that we have a way to go. The challenge is starting to make homeownership for minorities more equitable and more on par with the white population,' Adams said. 'There's a lot that needs to happen, and a lot of that needs to come from government policy.'