This month, as we recognize Homeownership Month, I can’t think of a better time to rededicate ourselves to the opportunity for everyone to own their home. We’re not there yet, and there are tangible and correctable reasons why.
Today, the homeownership rate for all Americans is 65 percent. It could be higher and for most of us, it is. The homeownership rate for White Americans stands at approximately 75 percent. A homeownership rate in the low- to mid-70s is often viewed as near the top of a sustainable range. Pushing significantly higher risks repeating the unsustainable lending practices that contributed to the 2008 financial crisis. Roughly one quarter to one third of American households are renters, and for most of them renting is the right choice for reasons of mobility, finances, or preference.
But for Black Americans, the homeownership rate is 44 percent. For Latino Americans, it is just over 48 percent. These are not small differences. They are gaps of more than 25 percentage points, and they represent millions of families for whom the American Dream is just that—a dream. That’s simply not good enough for a country that is founded on the self-evident truth that we are all created equal and endowed by our “Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.” In a letter from Thomas Jefferson to James Madison in 1785, he indicates what he meant when he said, “small landholders are the most precious part of a state.” 250 years later, that promise is both a guiding light and a challenge to meet our fullest potential as a nation.
Homeownership is so much more than just shelter. Today, homeownership is the most reliable wealth-building tool available to the American middle class. It also provides stability, encourages civic belonging, and creates a legacy of wealth that can be left to our children. It’s the reason why we call it the American Dream of homeownership.
These differences do not exist by accident. They rest on a foundation of intentional exclusion, disadvantage, and misinformation. One of the most pernicious is the idea that diverse neighborhoods lower property values. This idea, one that I grew up with in the suburbs of Detroit, violates the cardinal rules of economics – the law of supply and demand. When more people want the same product, the value of that product increases. Racism and fear violate that law, and punish everyone as a result.
The good news is that the tools that address these gaps do not disadvantage anyone. Just the opposite. They expand markets, stabilize neighborhoods, and increase home values.
To see the current challenge to non-White homebuyers in context, we have to take an honest, data-driven look at the history and its legacy impact.
Redlining, the practice of denying credit and investment to minority neighborhoods, was codified in federal policy by the Home Owners Loan Corporation (HOLC) “residential security” maps beginning in 1933 and by the Federal Housing Administration underwriting practices in 1934. The HOLC’s mapping and evaluation of neighborhoods was laser-focused on race. Every racial group was precisely accounted for and racial deed restrictions were touted as examples of neighborhood stability. Geography became a proxy for identifying where racial groups lived.
One need look no further than the HOLC mapping descriptions – the narratives written by neighborhood evaluators. Areas identified as “B – Still Desirable” and colored blue, routinely note the importance of deed restrictions, and no African Americans. Areas rated “C – Definitely declining” and colored yellow, emphasize the threat of “Negro infiltration.” Another area, “D – Hazardous” colored red, typically notes the high numbers of African Americans and “Aliens.” Not much was left to the imagination. Intent was transparent because it was legally sanctioned.
The Fair Housing Act of 1968 prohibited such blatant discrimination, but prohibition is not elimination or remediation. And when transparent intent is against the law, actual intent will be necessarily obscured. Economists at the Federal Reserve Bank of Chicago and other researchers have demonstrated that areas denied credit in the aftermath of the Great Depression continue today to have lower property values, lower homeownership rates, and lower credit scores.
Progress does not erase this legacy. And progress that leaves the underlying gap intact is not enough. There are legacy impacts that are incredibly resilient. The case of my own family is a useful illustration.
My father spent his teenage years working in the junkyard his father ran on a rented lot in Detroit during the Great Depression. His father spoke two languages fluently as well as broken English I struggled to understand. When he turned 18, my father enlisted in the Marines and left Detroit to serve his country 8,000 miles from home. Those who survived the Second World War were rewarded for their service with the GI Bill of Rights, which offered the opportunity of a college education and subsidized homeownership. As a result, my father was the first person in his family to go to college or own his own home. He wasn’t alone. The U.S. homeownership rate increased from 41.2 percent to 66.4 percent between 1940 and 1960.
This was not the case for veterans who were not White; most were excluded from the GI Bill’s benefits because the same federal government that created it also excluded people of color from VA and FHA mortgages, and the resulting disparity has grown, not shrunk. Between 1940 and 1960, the gap between Black and White homeownership increased by over five points from 21.9 to 27.3. This is not just a part of our history. It is a disparity that has grown, not shrunk. Why? There are many reasons, but one of the most impactful is the tremendous influence of multigenerational homeownership.
Buying a home for the first time is extraordinarily stressful, and saving for a down payment in your 20s can be a daunting challenge. In my first-time homeownership experience, I had three powerful advantages. First, I grew up with a sense of entitlement to eventually own my own home because I lived in a house my parents owned, and my grandparents also owned their home. Second, my parents were available to encourage me and advise me at every step of the process. The third was the most tangible. My wife and I both had jobs and worked hard to improve our credit and save for a home. But we also participated in what I call the Daddy Down Payment Program. My parents gave us $10,000 to help with our down payment and closing costs. We wouldn’t have been able to afford our first home without it. It was made possible by the wealth they built over a generation, aided by government programs and subsidies that not everyone received.
I’m grateful for the help I received, and I worked hard for what I have. But let’s be clear. Just because I was born on first base, doesn’t mean I get to brag about hitting a single. Most of the children of Black World War II veterans did not have parents who became homeowners with the GI Bill because they were denied access to homeownership, in spite of the U.S. Bill of Rights. For them, there was no feeling of entitlement to homeownership, no experienced advice from parents, and no Daddy Down Payment Program.
The legacy of racism contributes to disparate impact as much as contemporary racism. When courts and policymakers declare the problem solved before the gap is closed, they are not being neutral. They are making a choice to accept the gap as permanent.
When a disparity survives economic controls, it is incumbent on us to understand why and responsibly remediate these causes. One explanation, supported by decades of research and enforcement data, is discrimination, whether overt, unconscious, or embedded in facially neutral systems. Choosing to ignore that explanation is not neutrality.
“I didn’t mean it” is not an explanation or justification; it’s an excuse. As I have written before, it is a choice to accept and perpetuate the impact. Most parents have had the experience of a child breaking a family heirloom and defending themselves with the assertion that they “didn’t mean it.” But that neither absolves their responsibility, nor that of their parents to have taken precautions.
Overt, intentional discrimination is the exception rather than the rule in today’s housing market, and that should be recognized and celebrated. But it has not been eliminated, and the evidence is not ambiguous.
In 2022, the Department of Justice (DOJ) and HUD reached a settlement against Meta (Facebook) for discriminatory algorithmic housing ads that allegedly targeted users based on Fair Housing Act-protected characteristics, including race and sex. That case was originally brought in 2019 under President Trump and HUD Secretary Ben Carson. It was a bipartisan recognition that 21st-century technology can replicate the discriminatory marketing of the 20th century at massive scale.
Documented appraisal bias has been revealed through what researchers and journalists have called “whitewashing” tests, in which Black homeowners removed family photos and other racial indicators before appraisals and received significantly higher valuations for the same property.
Enforcement data reinforces the point. The Department of Justice pursued multiple redlining cases during the first Trump administration, including the 2018 KleinBank settlement for redlining in Minneapolis-St. Paul, and the largest redlining settlement in DOJ history against City National Bank for over $31 million, concerning discrimination that occurred from 2017 to 2020. Recent enforcement actions reveal that discrimination continues through facially neutral policies, including marketing strategies, branch placement, and algorithmic models that produce systematically discriminatory outcomes. Modern credit discrimination rarely involves explicit statements of intent.
Given the ongoing evidence of discrimination in lending and the housing market, it is rational for qualified minority borrowers to question whether they will be treated fairly, and that skepticism itself can suppress participation.
Special Purpose Credit Programs (SPCPs), explicitly authorized under the Equal Credit Opportunity Act, allow lenders to design products that extend affordable credit to underserved communities. They are not charity. They are smart business. SPCPs have provided lenders with an innovative tool to extend affordable credit into new markets, growing their own businesses in a fair and safe way, expanding access to credit to underserved communities, and strengthening local economies. According to data from the National Fair Housing Alliance and the Center for Responsible Lending, approximately five million families are at first homebuying age, above 40 percent of area median income (AMI), and 71 percent of them are families of color. That is not a niche market. That is the future of mortgage lending.
Targeted outreach and marketing to underserved communities, homebuyer counseling programs, and down payment assistance are equally powerful tools. NHC’s own policy agenda is explicit: narrowing and ultimately closing the homeownership gap is essential to the future prosperity of all Americans and the growth of mortgage lending markets. NHC serves on the steering committee of the Black Homeownership Collaborative, a coalition of 125 private sector and nonprofit organizations dedicated to creating three million net new Black homeowners by 2030. That goal is achievable. But it requires intentional effort, not passive hope.
Lenders who ignore underserved markets are not being neutral. They are leaving qualified borrowers and significant market share on the table. This is why so many of NHC’s lender members have prioritized expanding outreach to underserved markets.
Closing the racial homeownership gap is not about assigning guilt for the past. It is about accepting responsibility for the present. The gap is documented. The causes are documented. The tools to address it are available and legally authorized. What is required now is the will to use them.
The American Dream is a promise grounded in the very foundation of our nation. It is worth keeping.