Historically, Black households have acquired significantly lower amounts of wealth compared to other demographics, a trend that has persisted for centuries, but Black millennials are taking the lead to increase homeownership in hopes of decreasing economic gaps.
According to a Feb. 2020 report from the Urban Institute, disparities between Black and white homeownership rates in the United States had increased to their highest level in 50 years since the Great Recession, from 28.1 percentage points in 2010 to 30.1 percentage points in 2017.
Income discrepancies, lower credit scores and differences in marital status were reported as some of the factors that contributed to the wealth gap, which has left Black finances more vulnerable to unprecedented crises like COVD-19.
A November 2020 report released by the National Association of Realtors (NAR) reveals that 5% of home buyers during the first three quarters of 2020 were Black, compared to 4% in 2019.
Despite a 1% increase, U.S. Census data compiled by the Federal Reserve Bank of St. Lous shows Black millennials raised the homeownership rate by more than two percentage points in 2020. The Black homeownership rate observed a 3% increase, beginning at 44% in the first quarter of 2020, and growing to 47% in the second quarter of the year.
Brookings Institution fellow Andre Perry said that the surge in Black homeownership demonstrates the “buying power” that millennials are more cognizant of than other generations like Baby Boomers and Generation X.
“This new surge or uptick in the homeownership rate is really about the buying power of millennials and the consciousness that, ‘hey, in order for me to really have a stake in my community and in my country, I need to own,’ and I do think that millennials really understand this idea,” he told ABC News.
“People are looking for homes in the suburbs, where property can be cheaper,” the author of Know Your Price: Valuing Black Lives and Property in America’s Black Cities added, explaining that some prices are lower “because of the devaluation of property in Black neighborhoods.”
Chief Economist at the National Association of Realtors Lawrence Yun, said that “record low” mortgage rates bolstered the number of qualified buyers along with the “work-from-home phenomenon.” He concluded that millennials in the 26 to 39 age bracket had more secure jobs that allowed them to migrate from the cities to suburbs.
Yun also mentioned that homeownership rates have increased across the board, but Black millennials have been buying at higher rates despite the “awful” economic conditions.
“One can make an inference that the millennial Black Americans are not only participating in this [surge] in home sales, but they are a big contributor,” Yun told ABC News.
Although Black millennials are undoubtedly contributing to the surge in the homeownership rate, experts say there are still perpetual roadblocks in the future of Black buying due to higher demand and lack of inventory.
“It’s going to be a challenge for all millennials, but mostly for Black millennials because of wealth disparity and discrimination,” Yun said, according to Business Insider.
Perry also said that in order to rectify economic inequality, millennials must be the pioneers in the new wave of Black generational wealth.
“Black Americans want a piece of the American dream, and if we’re truly concerned about correcting injustices, we will make sure that millennials lead the way for other generations — older and younger,” he said.