Housing News

The Homeownership Gap is Growing for Black Millennials

Faced with a challenging housing market, fewer Black millennials are purchasing homes.

The number of Black millennials who were approved for a mortgage fell 21% from 2022 to 2023, according to the 2024 State of Housing in Black America report from the National Association of Real Estate Brokers (NAREB).

That put the homeownership rate for Black millennials at 32%—compared to 65% of white millennials, according to the report.

“When millennials slow their home purchases, it curtails opportunities for intergenerational wealth,” said NAREB President Courtney Johnson Rose. “Their success determines the aggregate potential for future Black homeownership increases.”

Overall, less than half of Black households, 45.7%, were homeowners in 2023. That is down from a high of 49% in 2004.

The Black homeownership rate was also significantly lower than the white homeownership rate of 74.3% last year.

The challenges facing Black homebuyers

High home prices and elevated mortgage rates were among the obstacles facing Black and other buyers.

Some potential buyers may choose to delay homeownership if it’s cheaper to rent than to buy. But that may hurt them financially in the future as rents continue to rise.

“Deciding to pay more than you can rent for…is a lot to digest, especially with inflation where our everyday items cost more,” said Mosi Gatling, senior vice president of strategic growth and expansion at New American Funding. She is also a Las Vegas-based loan officer.

“[However,] the value of ownership as a true investment to build wealth for the long game is still worth [the] pursuit,” said Gatling.

Those who want to buy a home may face additional challenges when trying to get a loan.

Black homebuyers were more likely to be denied a mortgage than white buyers. About 17% of Black buyers were rejected for a home loan compared to 7% of white buyers, according to the report.

Having a higher debt-to-income ratio was the top reason Black borrowers were not approved for a mortgage. (The ratio is the amount of debt someone has plus what they would be taking on with a mortgage relative to the amount that they earn.)

Credit history was the second reason Black borrowers were denied mortgages.

When Black buyers were approved for mortgages, they were twice as likely to receive a high-cost loan as white buyers, according to the report.

And many Black buyers may not receive as much financial support from friends and family as white buyers.

“Changing how we obtain ownership by co-buying or multi-generational buying may be the way we make some lemonade out of what the market has dealt to keep the Black homebuyer in the game of building wealth with homeownership,” said Gatling.

Mosi Gatling NMLS # 557166