Report Cites Broad Home-Equity Gains Across Minority, White Neighborhoods
MBA NewsLink Staff
Homeowners in white, minority and mixed-race neighborhoods posted substantial gains in home equity between 2012 to 2018, said Redfin, Seattle.
The analysis said minority neighborhoods started with the lowest levels of home equity as of 2012, but also saw the largest percentage gains. White neighborhoods had the lowest percentage gains in home equity, but the largest gains in absolute dollars.
According to the report, white communities had average home equity of $127,000 in 2012; by 2018 that equity had grown to $348,000, a dollar gain of $221,000 (171 percent). Minority communities began with average home equity of $69,000 in 2012; that had increased to $254,000 in 2018, a gain of $165,000 (265 percent). Mixed-race communities began with $104,000 in average home equity in 2012; that grew to $311,000 in 2018, a gain of $207,000 (197 percent).
"Home prices over the last six years rose most steeply in minority communities, and unlike in past booms when Americans just borrowed more and more money, these price gains led to real increases in wealth for homeowners of color," said Redfin CEO Glenn Kelman. "But even though homeowners in mostly minority communities had the largest percentage gains in home equity, it was the folks living in mostly white neighborhoods who had the largest dollar gains, just because they had so much more home equity at the beginning of the recovery."
Kelman added, "This just goes to show that, even as a strong market broadly benefits homeowners, it's still very hard for people starting with less money ever to catch up. On an absolute-dollar basis, homeowners in minority communities became wealthier, but still fell further behind."
The report said Riverside, Calif., was the only metro area in the study where minority communities posted the largest equity gains in absolute dollars, followed by mixed-race and then white neighborhoods. Denver's minority zip codes were home to the biggest percentage increase in home equity among all the groups of communities in the study, up 452 percent. All but three of the 16 metros measured saw the equity gap between white and minority communities widen. Riverside and Miami saw this gap narrow; in Boston, the gap was unchanged.