The home value gap for Black- and Latinx-owned homes still lags behind overall U.S. home values, but is narrowing, according to a recent Zillow analysis. The report found that homes owned by Black homeowners are worth 16.2 percent less than the typical U.S. home, while Latinx-owned homes are worth 10.2 percent less. Meanwhile homes owned by non-Hispanic white and Asian families typically are valued 2.9 percent and 3.7 percent higher than the typical U.S. home.
Data shows the gap has shrunk. Before the Great Recession, the gap between Black-owned home values and all home values was about 15 percent (and grew to 20 percent by March 2014). For Latinx-owned homes, the largest home value gap occurred in May 2012 at 14 percent—2 percentage points larger than before the housing bubble, according to Zillow.
The reason for the wide gaps at this time? According to Zillow, “the housing bust hit communities of color especially hard.” The most vulnerable communities were hurt by subprime lending that led to a wave of foreclosures. While there has been recovery, with home value growth turned positive for U.S. homes in August 2012, it has taken an additional two years for Black and Latinx homes to catch up on this growth.
“It has taken nearly a decade for the home value gap to return to pre-recession levels, but still, the gap remains very large,” says Zillow economist Treh Manhertz. “With Black and brown communities and jobs hit disproportionately hard in the pandemic, there has been reason to worry another dip may be on the horizon that could slow or stop the progress. However, this is not the case, as the same factors that widened the gap in the Great Recession are not surfacing this time. Thanks to rock bottom rates on the most secure mortgages, extended forbearance programs, and rising home prices, there are no signs of another widening of the gap coming this year. However, through these turbulent times, continued vigilance and targeted intervention by policymakers is crucial to keep the progress going for communities of color.”