Black-owned homes appreciated more than other groups since pandemic, but ‘it’s a low bar’

The gap between the value of the typical Black-owned home and the typical U.S. home remains wide, but homes owned by Black families appreciated more than any other racial group since the start of the pandemic, according to a new report.

The typical Black homeowner gained nearly $84,000 in equity from 2020 to 2023, according to a new analysis of data from Zillow and the Home Mortgage Disclosure Act.

In February 2020, the typical Black-owned home was worth 17% less than the typical home overall. By January 2023, that gap closed to 15%, which is the closest Black-owned home values have been to overall values since at least the year 2000.

Black home values appreciated 42% from pre-pandemic to January 2023, compared to 38% for overall home values and 38% for white home values.

Homebuyers can save: Mortgage insurance costs dropping for some new homebuyers. Here’s how much you could save.

72-hour move notice?: How you can get cheap rent, but it comes with a ‘bump’ notice. What it’s like living on ‘Standby’

Best home equity loan rates: If you want to repair your home or consolidate debt, a home equity loan could help

‘Room to catch up’: Black home values grow

The Great Recession gutted Black home values more than any other group, in part due to predatory loans and other toxic mortgage schemes. Between 2007 and 2009, the average white home equity declined by 9% while average Black home equity declined by 12%, according to an analysis by ACLU. These loses slowed to 2% between 2009 and 2011 for white households, while for Black households, home equity values declined by 6%.

By 2014, when the market overall started to finally pick up again, Black home values began to appreciate at a much higher pace because of those home values being so much lower over the past several years, Nicole Bachaud, senior economist at Zillow, told USA TODAY.

“There was a lot more room to catch up since Black home values were far below home values for all other races,” she says.

HOUSING MARKET: ‘Home sales are bottoming out’: Are homebuyers now calling the shots in 2023?

Buying your first home:  There are programs to help first time homebuyers 

Gen Z: Big cities a big draw

The momentum did not stop during the pandemic.

“One of the reasons why that might be happening is because in the past three years we’ve seen this big shift towards affordability,” says Bachaud. “A lot of buyers are focusing on lower-priced homes and since Black home values were far below home values for all others in almost every market, there was a lot more wiggle room and gap.”

The gains are important for wealth building as homeowners of color tend to derive more household wealth from home equity. In 2013, for instance, 69% of Black household wealth came from home equity, compared with 57% of white households, according to the Center for American Progress.

Home values appreciate among Black homeowners

Since 2014, the typical Black-owned home has appreciated 123% while the typical home overall has appreciated 100% since January 2014, according to Zillow.

Among the 50 largest metros in the country, the home value gap has shrunk the most in Detroit – by 9 percentage points – since February 2020. Kansas City, Chicago, Cleveland, Milwaukee and Louisville, among other markets, also saw large improvements, with the gap closing by more than 5 percentage points in that time.

Nancy Hite-Norde, a real estate agent with Coldwell Banker in New York’s Westchester County, says while it’s encouraging news, she’s not celebrating yet.

“It’s such a low bar,” she says. “It could all be wiped out with another massive recession.”

Homeownership among Black Americans

In 2021, the latest available data from the U.S. Census Bureau, 44% of Black households owned their homes, compared with 73.3% of white households – a gap of more than 29 points.

According to the most recent U.S Census Bureau data, Black homeownership increased 2 percentage points from 2019 to 2021, compared to 1.3% for the nation at large.

Mortgage denial rates and Black homebuyers

The study also found that many markets with the highest appreciation in Black home values also have the highest mortgage denial rates for Black applicants.

That means the markets where Black homeowners have the best chance of improving their household wealth and gaining equity with homeowners overall are markets where it’s most difficult for Black mortgage applicants to become homeowners.

Swapna Venugopal Ramaswamy is a housing and economy correspondent for USA TODAY.  You can follow her on Twitter @SwapnaVenugopal and sign up for our Daily Money newsletter here.

This article originally appeared on USA TODAY: Black-owned homes have appreciated more than others in US since 2014