What Drives the Racial Housing Wealth Gap for Older Homeowners?

Homeownership is one of the largest sources of retirement wealth for most households and is promoted as a key tool for wealth accumulation. However, a long history of discrimination in the housing market has constrained the ability of Black households to accumulate housing wealth relative to their White counterparts. Consequently, Black households approaching retirement are less likely to own homes and, when they do, they see lower wealth accumulation compared to White homeowners. This brief, which is based on a recent paper, focuses on the homeowners. The goal is to determine what share of the age-55 housing wealth gap is due to disadvantage at the time of first purchase – namely, less parental assistance with the mortgage down payment – and what share is due to slower appreciation of subsequent housing wealth? To isolate the impact of these factors, the analysis compares older Black and White homeowners who seem equally able to accumulate housing wealth based on their socioeconomic characteristics, but who still ended up with different outcomes. The discussion proceeds as follows. The first section provides background on how older Black families faced disadvantage in nearly every aspect of the housing market. The second section outlines the data and methodology used to evaluate the racial housing wealth gap over the lifecycle for otherwise similar homeowners. The third section presents the results, which show that both factors – disparities at first purchase and subsequent appreciation – play an important role in explaining the gap at age 55. The final section concludes that future research should consider how structural changes in the housing market over the past 30 years might have alleviated some barriers for younger homebuyers.