By Mark Lannaman
Given decades of racist practices, it may come as no surprise that Black Americans don’t fare as well as their White counterparts as far as homeownership rates go. When it comes to homeownership rate for Black Americans in Atlanta, though, the city sits at number five in the country according to a study conducted by Apartment List.
Rob Warnock, senior research associate at Apartment List, says he’s not surprised to see Atlanta so high — but the context around it is important. Homeownership rates, particularly Black homeownership rates, tend to be higher in the Southeast due to metro areas with large Black populations and a long history of being there for generations.
“Atlanta, like every other major metro area in the county, does have a racial gap in home ownership, in wealth and in incomes. But relatively speaking, being a large metro with a black homeownership rate above 50 percent, there’s only a handful of them and Atlanta is one of them,” Warnock said.
That being said, Atlanta is still subject to many of the inequalities found around the country. A nationwide gap in homeownership between Black and White Americans is still apparent, which corresponds with income trends and wealth for those same groups.
“Before the fair housing act in the 60s, a lot of blatant racial housing discrimination was legal… It’s only pretty recently that the government said that something that’s not going to be allowed,” Warnock said. “So the recency is something important to keep in mind — that [racist practices] were taking place at a time when home ownership was becoming the main vehicle for wealth creation for households across the nation.”
The importance of homeownership cannot be understated, either. Homeownership is more than just having a roof over one’s head — it’s a path toward generational wealth.
“It’s the most straightforward vehicle to wealth creation in the U.S. It is an asset that appreciates greatly. For better or worse it is scarce in the U.S. and that greatly pushes up the value of those homes. And it creates this wealth that we see passed on from generation to generation,” Warnock said.” “…So to expand homeownership is to be able to expand not just the wealth of someone who owns the home, but the potential wealth of their family for generations to come.”
While no longer explicitly legal, Warnock says lingering issues in the housing market have sustained a racial housing gap. Black homeownership rates haven’t seen much change since the 70s and 80s according to Warnock. However, that’s not unique to only Black Americans — it’s a phenomenon that has affected everyone.
“The homeownership rate expanded greatly in the post-World War II era when we were building homes everywhere when suburbanization was taking place. It was also the era of discriminatory housing policy and White flight; by no means was the landscape equitable,” Warnock said. “Nevertheless it was when the homeownership rate for all races expanded dramatically. Since then, it’s decelerated quite rapidly for all groups. For Black households, slightly more than others.”
To Warnock, this is indicative of a larger issue at play — less investment overall into homes with a growing population. In the years after World War II, housing construction boomed and helped shape the suburbanization that characterized that era. Now, housing construction is slower, despite a continually growing population, and only a fraction of new homes are affordable in a landscape that sees costs go up while wages remain stagnant.
All of this gives context to where we are today with our market, Warnock said.
“It speaks to the slower investment in housing investments nowadays, and also just the affordability of homes,” Warnock explained. “Across the country, markets are significantly more expensive. Home prices have grown significantly faster in a lot of places than incomes have. When you couple that with the fact that incomes have not grown equally for all groups, it leads to this stagnated homeownership rate and a broadening racial gap.”
The declining homeownership rate can also be analyzed generationally, with millennials and Generation X having lower rates across the board.
“With the Great Recession we had 25 years ago, which predicted the collapse of the housing market… millennials were coming of age at a time where the housing market was crashing… so we see now millennials reaching certain homeownership rates like 10 years later than previous generations would have,” Warnock said.
Just changing with the times?
With homeownership rates lower across the board, could other factors be at play? Perhaps newer generations don’t see the value in homeownership. Or maybe they just can’t afford it. The answer, it seems, may lie somewhere in between.
“It’s a bit of a chicken and the egg. Is homeownership less attractive because people enjoy renting, or are people finding ways of enjoying renting knowing that homeownership is unattainable,” Warnock asked.
In previous generations, life was a bit more straightforward — at least ideally. You get a job, settle down, buy a house, etc. But with people constantly switching careers and cities, renting may present itself as a more attractive option for some.
“People and culture adapt, renting is becoming more normalized and people are finding the benefits of it… Especially after the great recession, the mindset of ‘I’m going to be able to grow up, get a job and buy a house’ is just not there the way it was for earlier generations,” Warnock said.
Regardless, more will need to be done to tighten gaps between Black homeownership rates and others. Policymakers will need to be intentional about overcoming these gaps that were formed over generations where discrimination was the norm, Warnock said, and not simply remove the harms.
“Just the act of making discrimination illegal has clearly not, on its own, unlocked an equitable housing market. If you just look at what’s happening since the passing of the Fair Housing Act, the homeownership gap and the wealth gap has widened slightly. It’s certainly not enough just to say you can’t do x, y and z anymore, because that there’s a lot of lingering legacy issues,” Warnock said.
Today, a shining example of systems persisting is credit scoring. A relatively new phenomenon beginning only in 1989, the practice has long been said to favor White Americans and hinder advancement for groups of color. Whole more regulations exist today to mitigate this, but it still permeates throughout the housing market and is a contributing factor that should be addressed, according to Warnock.
“It tends to favor some groups over others, particularly those who have access to capital. Credit scoring guidelines today have been a big reason Black households have not been able to qualify for mortgages,” Warnock said. “I think we’ve done away with the explicit discriminatory policy that’s built into credit scoring, but the reliance on it today and the legacy of it… I think that’s one area where a lot of people say we need reform in order to make homeownership available for people of all different backgrounds.”
Addressing this would be one part of addressing systemic inequalities that have plagued minority groups for decades, and a step towards leveling the playing field to ensure everyone has a chance towards wealth creation through homeownership.
“It’s the most straightforward vehicle to wealth creation in the U.S. It is an asset that appreciates greatly. For better or worse it is scarce in the U.S. and that greatly pushes up the value of those homes. And it creates this wealth that we see passed on from generation to generation,” Warnock said. “So to expand homeownership is to be able to expand not just the wealth of someone who owns the home, but the potential wealth of their family for generations to come.”
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