The homeownership rate for Black households is increasing, but not at the rate it should be according to new data released by Zillow.
The tech real-estate marketplace company’s research points to a chasm between Black homeowners and other racial groups’ national average of approved mortgage application since 2019.
“Insufficient credit is holding many Black households back from homeownership,” the company states in a news release shared with ESSENCE. “Nearly 1 in 4 mortgage applications from Black borrowers — 24% — are denied, according to 2023 Home Mortgage Disclosure Act data. That’s almost twice the rate of all applicants (12.6%) and far higher than the 1-in-10 denial rate for white applicants. Of those mortgages denied Black applicants, more than 43% are turned down due to credit history – the most common reason given. That’s a higher rate than in past years and also when compared to 32% of denials for white applicants.”
As ESSENCE has previously pointed out, Black homeownership l can be linked to systemic racism, specifically redlining which is discriminatory practice in which financial services are withheld from neighborhoods that have significant numbers of racial and ethnic minorities.
“While discriminatory policies like redlining have long been outlawed, the damage from these historic practices is still felt today,” said Zillow senior economist Orphe Divounguy in a statement. “Many communities once barred from accessing credit are now finance deserts, with few traditional financial institutions, making it harder to build credit and buy a house. That’s why it’s so important to expand credit access. Allowing rent payments to count in credit scores is one example of how to move the industry forward.”
In its research, Zillow points out just under 46% of Black households own their home, a slight jump from 43% in 2019, but still down from a 49.7% peak ownership rate reached in 2004, before the Great Recession, and far off from the 74% rate for white households.
In response, the company says it launched a feature that allows rent payments made to landlords on the Zillow Rentals platform to count toward credit scores, helping to raise the renter viability when seeking homeownership.