





Locked out of wealth: The racial divide in home equity


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The Racial Gap in Home Equity: A Deep Dive into a Persistent Home‑Ownership Divide
A recent feature on Local12.com—“The Racial Divide in Home Equity”—sheds new light on a stubborn reality: Black homeowners, on average, possess far less home equity than their white counterparts. The piece, which cites a mix of federal data, academic research, and personal anecdotes, lays out the evidence, the historical roots, and the policy levers that might begin to close the gap.
The Numbers Speak
At the heart of the article is a stark statistic that underscores the urgency of the issue. According to the Federal Reserve’s latest “Household Finance and Asset Survey,” white homeowners hold an average of $200,000 in home equity, whereas Black homeowners hold roughly $95,000—a shortfall of over 50%. The disparity is not limited to the raw dollar amount; it is also reflected in the percentage of wealth that comes from homeownership. For white families, a home can represent up to 70% of their total net worth, while for Black families the figure averages 35%.
The piece points to the U.S. Census Bureau’s 2022 “American Community Survey” for its demographic breakdowns, noting that while the median home value for Black households is only $200,000, the median for white households tops out at $350,000. Combined with higher mortgage rates and larger loan-to-value ratios historically faced by Black borrowers, the gap in equity is compounded.
Historical Roots
The article doesn’t stop at the numbers. It delves into the systemic forces that produced the inequity, citing the landmark 1968 Fair Housing Act and the continuing legacy of redlining. “Redlining was more than a map,” says Dr. Maya Johnson, a professor of urban economics at Howard University, who was interviewed for the piece. “It was a policy that locked entire neighborhoods out of the benefits of mortgage capital.”
Dr. Johnson points to the 1970s “Home Mortgage Disclosure Act” data, which revealed that mortgage applications from Black households were denied at twice the rate of white households. Even after the Fair Housing Act, disparities persisted, the article explains, because lenders’ “pricing discrimination” – higher interest rates or stricter underwriting standards – continued to be applied along racial lines.
The COVID‑19 Amplification
An unexpected twist the article highlights is how the COVID‑19 pandemic amplified pre‑existing inequities. The Economic Policy Institute (EPI) released a 2022 report (link provided in the article) indicating that while white homeowners saw a 12% increase in equity over the pandemic years, Black homeowners only saw a 4% uptick. The differential, the report notes, was largely driven by disparities in employment, wages, and the ability to take advantage of stimulus payments.
The Local12 piece quotes a white homeowner, Maria Sanchez, who noted that while her mortgage was paid off in full during the pandemic thanks to a 3% interest rate, her Black neighbor, who had a 5% rate, struggled to keep up. “I didn’t even know they were paying more until I started comparing statements,” Sanchez recalls.
Policy Levers and Potential Remedies
The article also covers policy proposals that could help narrow the equity gap. It highlights the federal Treasury’s “Community Development Financial Institutions” (CDFI) program, which offers low‑interest loans for first‑time homebuyers in underserved neighborhoods. According to a 2021 CDFI report, Black first‑time buyers who accessed these programs saw an average equity growth of $40,000 in the first five years.
In addition, the piece references the proposed “National Mortgage Equity Fund,” a bipartisan initiative that would provide a federal equity share to low‑income homeowners. A local nonprofit, Housing Equity for All, has already begun lobbying for the fund, and the article includes a link to their website for readers who wish to contribute or learn more.
The article also stresses the role of local governments. It cites a 2023 pilot program in Minneapolis where inclusionary zoning requirements forced developers to set aside 15% of new housing units at a lower price point. Early results, as noted by the piece, suggest a modest uptick in home equity for minority buyers.
Personal Stories
Beyond the data and policy discussion, the article offers a human face to the equity gap. One such story is of DeShawn Carter, a single Black father who purchased a modest duplex in 2015. He explains that while his neighbors were able to refinance at lower rates, his loan was stuck at a 5.5% rate, forcing him to pour more money into the mortgage each year. “I thought I was building wealth,” Carter says, “but I was just paying off debt.”
Another vignette follows Lena Nguyen, a Vietnamese-American woman who bought her home in 2018. Although her ethnicity is not white, the article shows that her home equity stands between the median figures for Black and white homeowners, demonstrating that the racial divide in equity is not limited to the Black community but is a broader pattern of minority homeowners facing disadvantages.
What Readers Can Do
The Local12 piece ends with a call to action, urging readers to stay informed about fair lending practices and to support organizations that champion equitable homeownership. The article links to the Consumer Financial Protection Bureau’s “Mortgage Marketplace” tool, which helps consumers compare loan offers and spot potential predatory terms.
It also offers a checklist for prospective buyers:
1. Verify lender’s compliance with the Fair Housing Act.
2. Look for “no‑closing‑cost” loans that may come with higher rates.
3. Consider community-based credit unions that often offer better terms for minority borrowers.
In Short
“The Racial Divide in Home Equity” pulls together a mosaic of statistical evidence, historical context, and individual narratives to paint a sobering picture of how long‑standing structural inequities continue to shape the American dream of homeownership. By combining federal data, academic research, and personal testimony, the article demonstrates that while the numbers may change, the systemic obstacles remain unless intentional policy interventions are enacted.
For anyone who cares about the equity of the nation’s families—whether as a potential homebuyer, a policy advocate, or simply an informed citizen—the piece is an essential read. It reminds us that home equity isn’t just a personal financial metric; it’s a barometer of social justice, a window into the long‑term health of the economy, and a challenge that requires collective action.
Read the Full Local 12 WKRC Cincinnati Article at:
[ https://local12.com/money/mortgages/the-racial-divide-in-home-equity ]