![]() ![]() Notes: Figure displays the proportion of all households that are homeowners. In fact, the Black-white gap in homeownership rates was the same in 2020 as it was in 1970, just two years after the passage of the Fair Housing Act of 1968, which sought to end racial discrimination in the housing market. Like the overall racial wealth gaps, these gaps in homeownership rates have changed little over the last three decades (see Figure 1). In the second quarter of 2022, the homeownership rate for white households was 75 percent compared to 45 percent for Black households, 48 percent for Hispanic households, and 57 percent for non-Hispanic households of any other race. The benefits from homeownership have not been shared equally. We then highlight differences in home values, housing returns, and distressed home sales across groups and conclude by showing how all of these factors combine to produce large disparities in housing equity wealth. In this post, we begin by discussing racial disparities in rates of homeownership, their persistence over time and across the lifecycle, and their determinants. As such, government policy over the last century has been designed to promote homeownership by instilling additional economic benefits to homeowners in the form of the tax benefits discussed above and other policies such as tax credits for first-time homebuyers. Despite these costs to households and the macroeconomy, the benefits have largely been perceived to outweigh the costs. Homeownership can have some drawbacks, including high transaction costs, the lack of diversification compared to assets like index funds, the correlation of price risk with local labor market outcomes, and restricted mobility. Households outside the top wealth decile derive more wealth from housing equity than from financial assets, businesses, or other components of non-retirement wealth. In addition to the substantial sense of security that housing stability provides, homeownership imparts many economic benefits to households including unique access to leverage, a hedge against rising rents, tax deductions for mortgage interest and property taxes, low capital gains taxes relative to other investments, and, crucially, a vehicle for building wealth. In this blog post we discuss the stark differences in homeownership and housing wealth across racial and ethnic groups in the United States, which are key contributors to the persistence of the racial wealth gap and drive differences in economic security across groups. Racial Differences in Economic Security: The Racial Wealth Gap Racial Inequality in the United States, 2. The other posts can be found at these links: 1. This is the third installment in a series of blog posts on racial inequality produced by the Office of Economic Policy.
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