Becoming a Homeowner Isn't Easy. Here's How Three Black Families Did It
When Such Charles applied for a mortgage to buy her home in 2016, her lender asked if a family member could “gift” the money for a down payment. It was not uncommon for first-time buyers to receive gifts of $50,000 or $100,000, he told her. As riots over the killing of George Floyd swept the country last month, Charles, who is Black, recalled the conversation in a tweet concluding, “That’s the 400-year head start we don’t have.”
By July, the tweet had been shared over 86,000 times. It elicited support from minority homebuyers who recounted similar experiences and pushback from some white people who said they didn’t get six-figure handouts either. For Charles, that argument misses the point. People think “if they’re not wealthy it is the same not wealthy,” she says. “It is not the same at all.”
The numbers back her up. U.S. Census Bureau data shows that the homeownership rate for Black households is 44%—30 percentage points below the 74% rate for white households. Meanwhile, the average parental wealth of white college graduates is almost 10 times greater than that of Black college graduates, according to the Housing Finance Policy Center at the Urban Institute.
The disparity in homeownership is both a symptom of the wealth gap and a factor in perpetuating it. “The majority of Americans still build wealth through their homes,” says Carolina Reid, a professor at UC Berkeley, who researches the relationship between homeownership and wealth, as well as how structural disadvantages contribute to the racial wealth gap. In the United States, more so than in many other countries, wealth creates opportunity, Reid explains. It often determines health outcomes and how people fare in college and retirement.
She adds, “If we are continually allowing the past discriminatory behavior of the government to dictate who can build wealth and who can’t, it can have a domino effect on future inequality. For example, whites who were able to buy homes after World War II—as Blacks were excluded from homeownership through redlining and racial covenants—have more wealth today, which allows them to transfer that wealth and all of the associated benefits to their kids.”
