Homes owned by Black families have appreciated more than any others since the onset of the COVID-19 pandemic, according to a new report from Zillow. The average Black homeowner gained nearly $84,000 in equity during this time, and Black homeownership rates have also increased — despite a disproportionate rate of job and income loss.
Per the report, Black homeowners saw their home values increase by 42.5% from February 2020 to January 2023, compared to 38.5% for overall home values and 37.8% for white-owned home values. On the other hand, the values of Hispanic and Asian-owned homes increased by 38.3% and 37%, respectively.
According to Nicole Bachaud, senior economist at Zillow, these types of gains are crucial for increasing wealth among the Black households, as homeowners of color have a large proportion of their household wealth tied to their homes.
“Due to years of redlining and other forms of systemic discrimination, housing disparities between Black and white families persist,” Bachaud said. “Policies and interventions like expanding access to credit, building more affordable homes and finding new approaches to mitigate appraisal bias are keys to achieving housing equity.”
And, while the average Black-owned home is still worth less than the typical home overall, the gap is closing, according to Zillow.
In February 2020, the average Black-owned home was worth 17.3% less than a typical U.S. home overall. That gap had declined to 14.8% as of January 2023. The difference between the typical Black-owned home value and the value of the typical U.S. home is now the smallest it’s been in more than two decades.
The home value gap between Black-owned homes and all U.S. homes has shrunk the most in Detroit, according to Zillow. In Detroit, Black-owned home values have increased by 51.7% since February 2020, and the ratio of Black home values to home values overall has increased by nine percentage points since that time.
A number of Midwest markets also saw growth in Black-owned home values, including Kansas City, which the ratio of Black home values to home values overall increasing by 8 percentage points. Chicago, Cleveland, Milwaukee, Birmingham, Buffalo and Louisville–Jefferson County also experienced significant growth in Black-owned home values.
Conversely, a number of markets have experienced a widening in the home value gap since February 2020, including Denver, Las Vegas, Nashville, Portland, Los Angeles–Long Beach–Anaheim, Minneapolis, Riverside, Seattle, San Diego and San Francisco.
Zillow notes in its report that, in particular, West Coast markets like San Francisco have historically had a smaller share of Black residents and more expensive home values. The high historical home prices, coupled with the pandemic price increases, likely contributed to the gap widening between Black home values and home values overall.
The report also utilized Census data to compare Black homeownership rates to homeownership rates in white households.
Homeownership increased most for Black women aged 75 and up and Black women aged 45-54 during the pandemic — with both groups experiencing the largest homeownership increase out of all Black age and sex homeowner groups. Per the report, both groups experienced 2.9 percentage points of growth between 2019 and 2021. Black men aged 35-44 also saw an increase in homeownership during that time, with an increase of 2.5 percentage points.
In addition, the report notes that other research suggests that younger, high income Black households took advantage of low rates in 2020 and 2021 to achieve higher homeownership rates.
Certain markets also experienced a more significant closure in the Black homeownership gap during that time. As of 2021, the Black homeownership gap had shrunk the most in Salt Lake City (by 47.3 percentage points), followed by Minneapolis–St. Paul (45 percentage points), and Milwaukee (by 41.5 percentage points).
Additionally, the report notes that the improvement in Black homeownership rates that occurred during the pandemic is positively correlated with an increase in the ratio of Black home values to home values overall. Per the report, Black homeowners in areas with growing Black homeownership rates were more likely to have had their equity surge over the past three years.
But despite making progress in housing wealth, the report states that Black Americans still face unique barriers to home ownership.
“This means the markets where Black homeowners have the best chance of improving their household wealth and gaining equity with homeowners overall are markets where it’s most difficult for Black mortgage applicants to actually become homeowners,” according to the report.
