Spotlight on Minneapolis: How the Real Estate Industry is Working to Address the Black-White Homeownership Gap
The racial disparity in rates of homeownership is large, but for advocates of change, there are concrete steps to narrow the gap.
By Adina Solomon
REALTORS® are members of the National Association of REALTORS®
When she began working as the CEO of the Minneapolis Area REALTORS®, Carrie Chang was shocked to learn something about her hometown: The rate of Black people in Minnesota who own homes peaked in 1950. That was before the civil rights movement and 1968’s Fair Housing Act.
In Minneapolis — where Black Lives Matter protests after George Floyd’s murder in 2020 sparked a nationwide movement — 77% of white residents own homes. Only a quarter of Black residents do. With a difference of 52 percentage points, Minneapolis has the widest homeownership gap between Black and white people of any major U.S. city.
“[Minneapolis] is very segregated,” Chang emphasizes to the Daily Beast. “That's the reality of the way that we live in our community here, which is not healthy and definitely perpetuates the homeownership gap that we're working so hard to close.”
That gap is projected to worsen. Without intervention, the national Black homeownership rate is predicted to decline to 40.6% by 2040.
The reasons for the homeownership gap are complex. Historically, government at all levels passed policies that erected barriers to homeownership for people of color. One of the most infamous is redlining, where the federal government refused to insure mortgages in neighborhoods of color, Chris Vincent, Habitat for Humanity International’s vice president of government relations and advocacy, tells the Daily Beast.
In addition to the government, the banking system and real estate industry were actively involved in perpetuating inequitable practices.
“Even though the 1968 [Fair Housing Act] made them illegal, you had...a whole structure around how housing was facilitated and accessed,” Vincent says.
Inequities shut many Black families out of homeownership and, ultimately, the resulting wealth building. And, for Black homeowners, disparities such as the devaluation of homes in Black neighborhoods have also meant that their home values have not appreciated as much as those in white neighborhoods.
Recent events have also taken a toll. The 2008 financial crisis, which disproportionately impacted people of color through targeted subprime mortgages, substantially eroded Black wealth. COVID-19 has further exacerbated the situation.
Over the years, the real estate industry has acknowledged past and present discrimination and taken action to help address the resulting inequities. Minneapolis Area REALTORS® is examining its own role in the city’s homeownership gap, Chang says. The organization is working to ensure that its members and their clients are fully informed about the state’s down payment assistance program and its qualification requirements.
Additionally, it’s helping launch Pathway to Achievement, which aims to ensure there are more real estate professionals of color in Minnesota through providing educational support and mentorship opportunities. This will, in turn, help increase Black homeownership by building more trust into real estate interactions, Chang adds.
At the country-wide level, the National Association of REALTORS®, a trade organization of real estate professionals who must adhere to a code of ethics, are committed to advancing the right to real property for all, advocates for policies that promote an equitable housing finance system, including down payment assistance programs and tax credits. It is also a member of the Black Homeownership Collective, which launched an initiative in June aiming to increase Black homeownership by creating three million net new Black homeowners by 2030.
Another obstacle to homeownership is student loan debt, which inhibit prospective homebuyers’ ability to qualify for a mortgage or save for a down payment. The National Association of REALTORS® champions policy proposals to provide tax relief to student debt holders, who are disproportionately people of color. And, on the legal side, the organization calls on the government to increase funding for federal fair housing enforcement to help remove systemic barriers to homeownership.
These interventions hold the promise of benefits beyond increasing homeownership rates. Homeownership is the primary method of wealth creation, so increased Black homeownership would also mean there is a greater – and critically important — ability to build generational wealth.
Closing the Black-white homeownership gap will have positive effects throughout people’s lives — but, if nothing is done, that gap could widen.
“It's not going to get solved overnight,” Chang says. “You have to be patient and persistent to keep making the systems-level changes.”