Housing inequality: Black-white homeownership gap won’t close for 300 years

The aftermath of the 2020 racial awakening in America has made it appear as if businesses, politicians and other institutions are taking historical discrimination and disparities seriously. Large companies have called out racism, invested millions of dollars in both internal and external programs, and hired diversity experts and executives. But the gaps are still everywhere you look: Consider the racial disparity in homeownership.

According to a report from the McKinsey Institute for Black Economic Mobility released Thursday in honor of Black History Month, it could take more than three centuries for the gap between white and black homeowners to close (320, to be precise). This means that Black Americans will not have the same access to homeownership or lower rent burdens than white Americans.

Closing it sooner, according to McKinsey calculations, would require a 20-year affordable housing plan, costing between $1.7 trillion and $2.4 trillion, producing 7.3 million affordable renter units. low income, most of which (4.5 million) would go to black families.

“Indeed, there is nowhere in the United States where outcomes for black residents match those of their white neighbors,” according to the report. “Furthermore, most places close to parity are small, rural counties where outcomes are poor for all residents, regardless of race.”

In fact, housing affordability affects Black residents more because of long-standing institutional and social problems, says Valerie White, senior executive director of New York’s Local Initiatives Support Corporation (LISC). Fortune.

“It includes a mix of barriers to entry, such as racist practices in real estate and mortgage lending, and redlining, as well as the fact that Black Americans on average have lower pay than their white counterparts,” he says. This, “coupled with lower rates of generational wealth due to obstacles established by hundreds of years of institutional racism that began with slavery [continue] perpetuate the disparities we see today.”

Communities where Black Americans reside

Almost nowhere in the United States are outcomes for black residents the same as their white counterparts, the McKinsey report shows.

“No U.S. county with a sizable black population achieved parity, or even came close,” according to the report. In fact, less than 0.1% of the black population actually lives in a county or city close to parity.

According to McKinsey, about 30% of Black Americans live in megacities (the nation’s 12 largest urban centers), which is 7 percentage points higher than the overall national average. This includes New York City, Washington, DC, Seattle, Houston, Atlanta, and Chicago. While these types of cities tend to have higher incomes and stronger job markets, they also have greater inequality and high costs of living, according to McKinsey, and more than 50% of black residents in megacities have “outsized rent burdens.”

“Black residents of megacities earn more than their peers nationwide, but they earn about 60% of what white residents of megacities earn,” according to the report. Furthermore, “the gap in commute times between whites and blacks is notable, demonstrating that many black residents struggle to afford homes in affordable megacity neighborhoods.”

Another nearly 19% of Black Americans live in what McKinsey calls “stable cities” like Pittsburgh, San Diego, New Orleans, Detroit and Tulsa, where median incomes tend to be lower (at $52,000). These places also rank poorly in terms of health and longevity. Only 11% of white Americans live in stable cities.

Fewer black Americans live in the suburbs (which McKinsey calls “urban periphery”), which is about the only place where they tend to have better housing outcomes. Less than 12% of Black Americans live in these places, which is 5 percentage points less than the total U.S. population. These are the places, however, where median household income, management roles, life expectancy and college degree attainment are highest.

Additionally, only 52% of suburban blacks own their own homes, compared to 78% of their white peers. While housing affordability is a barrier to achieving homeownership, it is not the only reason Black Americans have not achieved housing parity. Other factors include racist practices in real estate, such as appraisal discrimination, neighborhood segregation, and other institutional efforts to prevent Black Americans from purchasing homes.

“With all of these factors combined and the institutionalization of racism entrenched for generations, the options for Black Americans looking to purchase a home become extremely limited,” he says. “Disparities in education and literacy also make Black Americans vulnerable to predatory practices in the banking, financial and legal processes involved in purchasing homes.”

Progress does not mean equality

Achieving housing equality won’t happen overnight, but Black Americans have experienced some improvements over the past decade. According to the McKinsey report, black unemployment rates have declined in stable cities, more black Americans have taken on management roles rather than service roles, rent burdens have declined, and incarceration rates have declined. Black Americans living in rural counties also gained greater access to broadband, and megacities had more Black Americans with college degrees.

However, many communities have seen the number of Black homeowners decline and commute times increase. According to McKinsey, the pandemic has also likely worsened labor force participation rates, lowering preschool enrollment rates and mental health.

“Although black outcomes improved over the decade in most counties in each segment, only about half of those counties narrowed the gap between the overall scores of black and white residents,” according to McKinsey. “Across most community profiles, racial gaps in some metrics have barely narrowed.”

Racial discrimination in housing has been perpetuated for generations, along with hundreds of years of institutional racism, White says, much of which still exists today.

“It makes perfect sense that it might take generations to see true equality,” he says. “But that timeline could take even longer if more is not done collectively to address these disparities. Intentional, immediate action can accelerate the timeline outlined in the study, but inaction could more easily extend it.”

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