According to a recent report from the Urban Institute, the decline in American homeownership rates since the Millennium Boom is most severe among black Americans. While the significant gulf in homeownership has always existed between whites and other American racial groups, the chasm is widening with time. The gap between white and black Americans is particularly large.

The rate of white homeownership has dropped 1% from its 2004 peak, while homeownership has dropped a full 5% in roughly the same period among black Americans. In Riverside, CA, for example, black homeownership dropped from nearly 50% in 2005 to 38% in 2016.

What’s at the bottom of this consistent and widespread issue, and how can it be solved?

The roots of the problem

The nature of the issue is twofold. First, housing policies in the US, even in California, one of the most left-leaning states in the country, are steeped in a discriminatory legacy. Look no further than the all-too-common practice of redlining, wherein lenders refuse to provide financing or insurance based on community demographics.

The second aspect of this problem has to do with lending practices immediately preceding the Great Recession. Many minority homebuyers financed the purchase of their homes with subprime mortgages — loans the mortgage holders knew had a high risk of default. The consequences of this practice reverberated into the recovery, when instead of peddling subprime mortgages, lenders stopped offering loans to minority homebuyers at all.

This shift in policy carried the always-present inequality in ownership rates between whites and everyone else into the post-recession economy.

Where do we go from here?

The Urban Institute report outlines five solutions to combat the disparity in black homeownership:

  • targeting the problem at the local level, including understanding why black ownership increases in some communities while it declines overall;
  • dealing with a shortage in housing supply — especially affordable housing;
  • supporting policies that help renters become homeowners (like down payment lending programs);
  • beefing up government mortgage programs like those run by the Federal Housing Administration (FHA) and the Department of Veterans Affairs (VA); and
  • keeping people in their homes — even through recessionary periods.

In California, one of the solutions might have to do with loosening overly restrictive zoning laws. Because of inflexible zoning policies, construction slows, leaving many potential homebuyers out to dry due to increasing home prices. At the same time, the overall state population increases at a faster rate than newer homes are built.

The California legislature recently passed a crop of affordable housing laws designed to target the state’s housing crisis. While many of these bills are aimed at the proliferation of multifamily housing, they come with additional side effects — such as increased savings rates — which will have a positive impact on homeownership trends, including rates of black ownership.

While zoning laws are only one aspect of the problem, fixing them is an important first step in closing the homeownership gap between white Americans and everyone else.