Economists' Outlook

Housing stats and analysis from NAR's research experts.

Q & A Corner: A Snapshot of Race and Home Buying in America

In February, NAR released the 2021 report, A Snapshot of Race and Home Buying in America. This report examines the homeownership trends among each racial group over the last 10 years. Since all real estate is local, homeownership opportunities vary by area. As a result, the report also examines where most minority homeowners are located and which areas are more affordable for these households. Finally, the report looks into the characteristics of who purchases homes, why they purchase, what they purchase, and the financial background for buyers based on race.

Brandi Snowden, Director of Member and Consumer Survey Research, and Nadia Evangelou, Senior Economist and Director of Forecasting for NAR Research, were the lead authors of the report. In this conversational Q&A, they provided perspectives on how to use the report, insights into the data and the results they found to be most interesting.

How did this report come about?

Brandi Snowden: As we complete the annual Profile of Home Buyers and Sellers report, we continue to take deeper dives into the data and look at different segments in the data for more trends. We had been releasing the Buyer Bios report, which highlighted trends among different home buyer and home seller segments, and we noticed opportunity to highlight the buyer bios charts on home buyer trends by race and ethnicity through the Snapshot of Race and Home Buying in America report. Along with examining homeownership data in the Homeownership Trends and Affordability by Race section, this report is able to shed light on affordability and home buyer characteristics by race and ethnicity.

Nadia Evangelou: The gap in the homeownership rate between Black and white families in the US has been stubbornly present at nearly 30 percentage points over the last several decades. In the meantime, the net worth of a typical white family is nearly 8 times greater than that of a Black family since homeownership remains the principal way most families build wealth in this country. Thus, we came up with the idea to conduct this study in order to address racial inequalities in homeownership at the local level. By identifying these racial inequalities across the country, this could help local communities to find the necessary ways to reduce the homeownership gaps among races.

What question(s) is this report trying to answer?

Brandi Snowden: This report helps to examine the trends, differences, and similarities among different races and ethnicities of home buyers. By looking deeper into the Profile of Home Buyers and Sellers data, we are able to look at home buyer characteristics, and buying trends that we aren't able to find through only the national report. Through the Snapshot of Race and Home Buying in America Report, we are able to answer questions and see trends among minority home buyer characteristics and also their buying preferences. Among all recent buyers we see that 31% were first-time homebuyers, among minority buyers we see that the share of first-time buyers entering the market is near 50% or higher. Members and consumers might not have been aware that minority home buyers are entering homeownership at a higher rate than the national numbers show.

Nadia Evangelou: The main goal of this report was to create the profile of the homeowner and homebuyer for each race in order to understand better why all families don't have equal opportunities to achieve homeownership. By looking at the demographics and the financial conditions of these demographics, we are able to identify some of the reasons that can explain why fewer people of color are able to become homeowners. For instance, while Black Americans earn less than their White counterparts, 43% of Black households can afford to buy the typical home in the U.S. compared to 63% for White households. Since all real estate is local, Black Americans can afford to buy even fewer homes in some areas across the country. In the District of Columbia, Hawaii, and Wyoming, fewer than 20% of Black households can afford to purchase a home. Thus, indeed, affordability is one of the main reasons for homeownership inequalities among races.

What did you find most interesting in this report?

Brandi Snowden: I found the role that family and friends play in minority home buyers' homeownership journey to be interesting in this report. Looking at downpayment sources, we see that gifts and loans from family or friends was a source of downpayment for 20% of Asian/Pacific Islander buyers, and 11% of both Black/African-American and Hispanic/Latino buyers. We also see that 17% of Hispanic/Latino, 16% of Asian/Pacific Islander, and 15% of Black/African-American buyers lived with parents, relatives, or friends, with or without paying rent, prior to their recent home purchase. As well, we see that the shares of minority home buyers that purchased a multi-generation home was also higher than the national numbers.

Nadia Evangelou: The finding that stood out to me was that in some areas with low Black homeownership rates, more Black Americans purchased a home than nationwide in 2019. For instance, in Florida and New York, 8% of the homebuyers were Black Americans compared to 5% nationwide in 2019. Although there is still quite a way to go, this is encouraging news.

How can our members use this data?

Brandi Snowden: Our members can use this data to gain knowledge on trends in minority home buying preferences and buyer characteristics. They are also able to use the Fair Housing section of the report to educate themselves on the discrimination that potential home buyers may witness or face during their real estate transaction. This can also become an opportunity for members to be a resource to their clients on recognizing discrimination and knowing how to report discrimination to government agencies.

Nadia Evangelou: This report provides useful insight about homeowners and home buyers by race at the local level to our members. They are able to see the reasons that Black homeownership still lags well behind other races. For instance, Black households are more than twice as likely than white households to have student loan debt while Black applicants were rejected for mortgage loans at a rate 2.5 times greater than white applicants. With valuable information and tools to start a dialogue in their community, they could help to close the Black-white homeownership gap so that our society would provide equal access to opportunity in homeownership to all.