The home-value gap for Black and Latinx homeowners is 16.2% and 10.2%, respectively, relative to the typical U.S. home.
The home-value gaps vary widely by region — from as small as 1% gap in the Riverside area to as large as 46% in Detroit.
The typical home owned by Black and Latinx homeowners is 16.2% and 10.2% less valuable, respectively, than the typical U.S. home overall. And while this gap has been shrinking in recent years, the disparity is a glaring example of persistent inequities in wealth building and access to home equity across races in the U.S. housing market.
Prior to the Great Recession, the gap between Black-owned home values and all home values was about 15% — if the typical U.S. home at the time was worth $1, the typical black-owned home was worth $0.85 — according to a Zillow analysis of home values in communities with different racial compositions. The gap grew to 20% by March 2014 after years of job losses and elevated foreclosures. Similarly, the ratio of Latinx home values to all home values hit bottom in May 2012 at 86% — down from 88% before the housing bubble. It has taken almost a decade for the typical home owned by a Black or Latinx homeowner to roughly get back to where it was relative to the standard U.S. home in 2007.
The housing bubble and bust hit communities of color relatively hard, often because predatory loans were targeted and designed to take advantage of the most vulnerable communities. The ensuing wave of foreclosures hurt both Black/Latinx homeownership and home values disproportionately, and growth in these communities was relatively slow for years even after the nation as a whole began to recover. Year-over-year home value growth turned positive for U.S. homes in August 2012, but the racial gap in home values didn't start to close for Black and Latinx homeowners until 2014.
A home's value and appreciation are deeply personal and impactful. A home is the single-largest component of many households’ wealth, and homeowners of color in particular are more likely to have the bulk of their household wealth tied up in their home. Homeowners also often depend on their home's equity as a savings cushion — especially in difficult times like the current pandemic-induced recession in which a wave of homeowners have refinanced and taken cash out of their homes. A home is also very often passed down to future generations, helping set them up for success and continued upward mobility. Thus, the relatively larger dip in home values and coinciding drop in homeownership among Black and Latinx communities during the Great Recession and early recovery years meant they lost a huge amount of wealth and opportunity.
Recent home value growth has been relatively quick, with Black and Latin home values generally outperforming the market by more than half a percent per year over the past 4 years. But while the racial home value gap has been slowly shrinking, it remains disturbingly wide — especially compared not just to the typical U.S. home, but to the homes owned by white and Asian homeowners. Home values for non-Hispanic white and Asian-owned homes have typical values 2.9% and 3.7%, respectively, above the typical U.S. home — if the standard home nationwide is worth $1, the homes owned by white and Asian homeowners are worth about $1.03 and $1.04.
The story for home values owned by Asian homeowners is somewhat different than the Black and Latinx narrative. Asian homeowners’ home values have not appreciated particularly quickly nationwide in recent years, but were also not hit quite as hard by the bust. The typical Asian-owned home value ratio relative to all homes surpassed the non-Hispanic White ratio in November 2009.
This analysis focuses on ratios because there are significant differences in the true typical home values by race. Even though the ratio of Asian home values compared to all home values is only 1.04, the typical home value for Asian homeowners was $473,800 in October — 80% higher than the national Zillow Home Value Index of $262,600. The difference comes down to geography. Approximately 31% of Asian homeowners live in pricey California, where the typical home value is $586,700. Focusing on the ratio and not the absolute value provides a better picture of relative opportunity in housing across the country.
Even so, the actual dollar value is important when talking about household wealth and the opportunities that home equity can provide. There is clearly some element of financial success that enables a household to be able to choose to live in California as opposed to elsewhere, but some of this may result from the opportunities available there. The same phenomenon means Pacific Islander homeowners have a high typical home value of $385,900, despite homes typically being valued at 94 cents on the dollar, relatively low. So each index will be useful for different purposes.
The ratio estimation of home values does a worse job of estimating ratios for groups almost completely segregated (or completely integrated) by county and/or those with very low populations. This is the case for Indigeous Peoples. Controlling using ratios within a county far understates the inequality for Native homeowners. The ratio-based value of 95 cents on the dollar obscures tremendous cross-county differences. Taking the weighted mean of state-level, value-based estimates yields a better valuation of about 84 cents on the dollar, about equal with Black homeowners.
Home value inequality varies greatly by state and metropolitan area. Some areas are mostly equal, while others have huge differences across races. Large metros with the smallest spread between Black-owned home values and overall home values are Riverside (1 cent less on the dollar), San Antonio (3 cents), Las Vegas (3 cents), and Portland (4 cents). Among the most unequal are Detroit (46 cents less on the dollar), Buffalo (43 cents) Birmingham (43 cents), St. Louis (41 cents) and Milwaukee (40 cents).
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