Becoming a homeowner, for many, requires sacrifice, but a study by Redfin found that this is truer for Black homeowners than their white counterparts. Specifically, about 23% of white homeowners report making no financial sacrifices to buy their first home, versus 14% of Black homeowners.
According to a report summarized by Redfin Data Journalist Dana Anderson, findings indicated that the financial standard for becoming a homeowner is higher for Black buyers than white and that "it is more difficult for Black Americans to buy homes."
This contributes to a substantial homeownership gap between the two groups, notes Anderson, with 73.8% of white Americans owning their home in the first quarter of 2021 versus just 45.1% of Black Americans.
"Homeownership is closely tied to the American ideal of freedom, and specifically financial freedom," said Redfin Chief Economist Daryl Fairweather. "The fact that Black buyers report earning more money and making more financial sacrifices to enter the homeowner class is one example of how difficult it is for Black people in this country to achieve the American Dream."
“Black homebuyers may believe they face higher standards than their white counterparts for getting a mortgage and getting their offer accepted, so they don’t even try to buy a home until they’re earning a significant amount of money,” Fairweather continued. “And some Black buyers assume they need to earn more than is necessary to buy a home because they don’t have parents or role models teaching them the finances of homeownership.”
That said, Thomas Loving, a cybersecurity professional who spoke at Redfin’s recent Homebuying: The Black Experience symposium, says the homebuying process is "absolutely different for a person of color."
He said that despite earning a well-above-average salary, he still ran into homebuying challenges.
"It’s not an easy journey. I really struggled trying to get an offer accepted on a house when I arrived in Houston," Loving said. "I earn more than $400,000 a year, even without taking my spouse’s income into account, and I was in a position where I had to jump through hoops to prove that I could afford even a starter home. It was outrageous. Black homebuyers are the exception, not the standard, and people often assume we can’t afford to buy a home even when we have successful careers and earn high incomes."
Loving's anecdotal evidence is backed by Redfin's survey of about 1,500 homeowners, which showed that Black homeowners were more likely to take a second job in order to finance a home; they were about twice as likely to have been high earners when buying their first home; and were less likely than white homeowners to have parents and grandparents who are homeowners, which means they’re more likely to benefit from generational wealth when they’re purchasing a home.
Access the full report at Redfin.com.