Understanding Racial Disparities in Homeownership

A new analysis shows the US states with the largest and smallest homeownership gaps by race and ethnicity compared to the statewide rate.

Polygon Research and the Homeownership Council of America (HCA) released a new analysis showing the states with the largest and smallest homeownership gaps by race and ethnicity, compared to the statewide rate.

Homeownership is an essential factor in driving wealth, and guaranteeing all consumers equal access to it is crucial to economic stability. The gap between Black and White homeownership rates is nearly the same today as in the 1970s, when the Fair Housing Act (FHA) and Equal Credit Opportunity Acts (ECOA) were enacted. The Community Reinvestment Act (CRA) was another Federal law enacted in 1977 to encourage banks to invest in low-income communities, though it has not brought forth more equality to homeownership in race and ethnicity.

Rankings based on differentiation from statewide homeownership, listed from the smallest to the largest gaps are as follows:

10. California
9. Alabama
8. Virginia
7. South Carolina
6. Louisiana
5. Georgia
4. Mississippi
3. Maryland
2. Alaska
1. District of Columbia

The information offered in the analysis helps organizations like the HCA narrow their scope on areas that have the greatest needs in the nation. The HCA has been working to implement Special Purpose Credit Programs (SPCPs) with nonprofit and corporate mortgage lenders. SPCPs are described in detail under the Equal Credit Opportunity Act statute.

According to HUD, SPCPs are special lending programs that will allow lenders and other groups to direct financial aid to groups historically locked out of homeownership, helping to reduce the racial and ethnic gap in homeownership.

"The need to fill the gap is especially pressing in a time when home costs are rising, and the supply is not keeping pace with the demand. Ensuring communities of color attain homeownership as soon as possible provides them with the most equity gain," said Gabe del Rio, CEO and President of HCA. "We are prioritizing our work in Special Purpose Credit Programs based on this information. We want to share it widely with the industry so others can establish SPCP programs as well."

To read the full report, including charts and methodology, click here.