2020 was a year of profound racial awakening in America, a year when institutions from corporations to politics seemed to finally acknowledge the long-standing racial disparities and discrimination that have plagued the country. Large corporations lined up to denounce racism, investing millions of dollars in internal and external programs and hiring diversity executives. Yet, despite these laudable efforts, racial disparities persist, evident in the stark racial homeownership gap.
A recent report by the McKinsey Institute for Black Economic Mobility paints a grim picture. Released in honor of Black History Month, the report posits that it might take over three centuries – precisely 320 years – for the gap between Black and white homeownership to close. This stark reality means that Black Americans are denied access to homeownership and face disproportionate rental burdens compared to their white counterparts.
Closing The Homeownership Gap
McKinsey’s report suggests that to close the homeownership gap sooner, a massive 20-year-long affordable housing plan is necessary. This plan, estimated to cost between $1.7 trillion to $2.4 trillion, would involve the creation of 7.3 million units for low-income renters, with a substantial majority (4.5 million) going to Black households.
However, housing affordability is just one side of the coin. Institutional and societal issues, like racist practices in real estate, mortgage lending, and redlining, further complicate the situation. Black Americans, on average, receive lower pay than their white counterparts, limiting their ability to acquire homes. Furthermore, the lower rates of generational wealth, a consequence of centuries-long institutional racism, exacerbates these disparities.
The Struggle in Urban Centers
Almost 30% of Black Americans live in what McKinsey terms as ‘megacities’ – the nation’s 12 largest urban centers. While these cities, including New York City, Washington, D.C., Seattle, Houston, Atlanta, and Chicago, offer higher incomes and stronger job markets, they are also characterized by greater inequality and high costs of living. Over 50% of Black residents in these megacities bear “outsize rent burdens.”
Meanwhile, nearly 19% of Black Americans reside in “stable cities” like Pittsburgh, San Diego, New Orleans, Detroit, and Tulsa. These cities, while providing a median income of $52,000, rank poorly on health and longevity.
Slow Progress Towards Parity
Achieving parity in housing isn’t a simple overnight process. The last decade has seen some improvements in Black Americans’ lives. Unemployment rates have dropped in stable cities, more Black Americans have taken up management roles, rent burdens have lessened, and incarceration rates have fallen. However, much work remains to be done to eliminate these disparities and ensure equality.
The path to parity is steeped in challenges, but it’s not insurmountable. With intentional and immediate action, we can fast-track the timeline outlined in the study. However, continued inaction could easily extend it. As we face this reality, it’s crucial to remember that genuine change requires a collective effort.
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