Homeownership Latinx Still Lags behind White Homeownership

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Racial wealth differentials have a severe impact on the rate of homeownership in California and, consequently, on agent activities.

Between 2016 and 2019, household wealth increased:

  • 65% for Latinx households;
  • 33% for black households;
  • 3% for white households; and
  • 8% for other households.

“Other” households include Asians, Native Americans, Native Alaskans, Native Hawaiians, Pacific Islanders, other races, and all respondents reporting more than one racial identity. These households have lower wealth than white families, but higher wealth than black and Latinx households.

Despite the rapid increase in the wealth of black and Latin households, the wealth gap between Latinx and Black households alongside White households remains important.

The average white household has eight times the wealth of the average black household and five times the wealth of the average Latinx household, according to Federal Reserve.

Many factors contribute to wealth growth and financial security, including:

  • intergenerational wealth transfers (such as inheritance and down payment gifts received from parents);
  • home ownership possibilities;
  • access to tax-exempt savings plans and personal savings; and
  • investment decisions.

But not all homeownership opportunities are created equal. For example, in the United States, the average house owned by a Latinx Owner is worth about 12.8% less than the average house owned by a white household at:

  • $ 246,300 for houses owned by Latinx, and
  • $ 282,400, for houses owned by whites according to Zillow.

In the big Californian subways, the Latinx home value gap compared to white households is even more important to:

  • -35% in Los Angeles;
  • -29% in San José;
  • -23% in San Francisco;
  • -20% in San Diego;
  • -7% in Sacramento, and
  • -4% in Riverside.

While house values ​​tend to be considerably lower for Latinx households, true Latinx homeownership rate gap compared to white households is also lower, at:

  • -24% in San José;
  • -23% in Sacramento;
  • -22% in San Diego;
  • -21% in San Francisco;
  • -18% in Los Angeles, and
  • -13% in Riverside, according to Zillow.

Latinxes make up 39% of the population in California, according to the United States Census Bureau, and their home ownership rates and home values ​​are much lower than those of the white population of California. Overall, there remains a significant wealth gap between Latin families and White families, and this unequal distribution of wealth is negatively impacting our housing market.

The next decade

The future stability of our housing market depends on whether homebuyers from various economic backgrounds have the opportunity to freely and openly participate in homeownership. A regular supply of new home buyers provides long-term support for agents’ activities.

But homeownership rates have been declining every decade since the 1970s, and it doesn’t look like it’s picking up anytime soon. California has the lowest homeownership rate in the country and it is steadily declining every year. California’s homeownership rate in the second quarter of 2021 fell further to 53.9%, below its historic average of 55% and well below the national average of 65%.

If we are to close the homeownership gap, it is imperative that California lawmakers work to develop homeownership opportunities for non-whites. Saving our market depends on the support of our current population of buyers.

Agents can take matters into their own hands by supporting home ownership by non-whites. For example, agents can monitor predatory loan and discriminatory housing practices, both of which contribute to the low homeownership rate of non-whites.

The Consumer Financial Protection Bureau (CFPB) is an agency of the U.S. government that makes sure banks, lenders, and other financial companies treat everyone fairly. Agents can direct all homebuyers to the CFPB mortgage buying tools for buying a home and mortgage advice.

To ensure that brokers, agents, lenders and landlords do not break non-discrimination laws, even unintentionally, professionals should:

  • ask the same questions of all applicants – for owners, feel free to ask questions about matters that will have a real impact on the rental like pets or waterbeds, but never ask about a protected status like race, religion, sexual orientation, pregnancy, etc. ;
  • keep records customer interactions – although a customer is unlikely to pursue discrimination lawsuits, it is best for an agent to track all customer interactions and property visits for several reasons, including identification any unintentional bias; and
  • if in doubt, contact a local fair housing expert for advice – find a list of experts at The HUD website.

To learn the basics of housing discrimination or to file a complaint, visit hud.gov.

Editor’s Note – Mandatory anti-bias training may soon be a part of regular certification and continuing education courses for agents and brokers. Senate Bill 263, which requires anti-bias training as part of the required course load for real estate licensees and license applicants from 2023, is heading to the governor’s office at the time of writing. Follow updates on the first Tuesday Legislative gossip page.

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