Today, thanks to decades of discrimination, many local Black families are able to tap much less wealth for down payments than white families.

In the wake of the killing of George Floyd, Americans are closely examining the state of racial tensions in the U.S., and how much progress has actually been made on racial equality in recent years.  

Different people will likely have different answers, but when it comes to the number of Black people that own homes, the numbers don’t lie: Very little progress has been made on improving Black homeownership rates in recent years. 

Only about a third of Black households in Greater Boston own their homes, while roughly 79 percent of area white households own their homes, according to an often-cited 2015 study conducted by the Federal Reserve Bank of Boston and Duke University.  

That’s below the national rate of Black homeownership, which the U.S. Census Bureau estimated to be 44 percent in the first quarter of 2020. It’s also up about 2.5 percent since 2016, but also the same rate of Black homeownership as in 1997, according to Zillow. 

Low rates of Black homeownership have resulted in a wealth gap between Black and white Bay Staters because owning a home is one of the easiest ways to build wealth. The median net worth of a white household in Boston is $247,500, while the median net worth of a Black household is only $8, to the Boston Fed study. 

A big question many ask when they see these staggering numbers is how did we get here?  

The problem did not happen overnight. Rather, it’s been building for decades through bad government policy, redlining and antiquated zoning laws, among other issues, said Soni Gupta, director of neighborhoods and housing at The Boston Foundation.  

“Black households were very deliberately left out of homeownership,” Gupta told Banker & Tradesman. “We are amongst the worst. The $8 net worth figure is the lowest amongst five metropolitan areas that were surveyed for the Color of Wealth reports.” 

Locked Out of Opportunity 

According to Gupta, the problem started in the 1930s when there was a foreclosure crisis during the Great Depression.  

The federal government created the Home Owners Loan Corporation (HOLC) to purchase delinquent mortgages, which created color-coded maps to indicate where it was safe for banks to provide new mortgages.  

Areas where Black households lived were colored red, or “redlined” and were considered “hazardous.” As a result, Black households were unable to purchase homes in communities where they already lived. 

Policies like this continued into the 1940s and 1950s, according to Gupta, who also said the government continued to provide loans to developers to build out the suburbs. Programs like the G.I. Bill enabled millions mostly white veterans and their families to purchase these suburban homes, but racial covenants in many developments locked Black veterans out of the same opportunities.  

Around this time, home prices began to appreciate, starting a domino effect that allowed white families to pass on wealth to their white children that they could then use for down payments on their own homes and to pay for higher education that led to higher annual incomes 

Lingering Discrimination 

The Fair Housing Act in 1968 prohibited racial discrimination in housing but government policies harmful to growing Black homeownership continued to be present into the modern era, said David Harris, managing director of the Charles Hamilton Houston Institute for Race & Justice at Harvard Law School. 

In the late 1990s and early 2000s, Former Boston Mayor Thomas Menino sought to redevelop the once–barren area now known as the Seaport. At the time, members of the largely white group called the South Boston Betterment Trust tried to exclusively gain the community benefits that typically come with big development projects. 

Groups such as The Fair Housing Center of Greater Boston, which Harris ran at the time, sued the city of Boston and the South Boston Betterment Trust for trying to solely obtain linkage funds and community benefits from the redevelopment. They argued that all the Seaport’s bordering neighborhoods, including Roxbury and Chinatown, should reap the benefits. 

Although the plaintiffs won their case, they did it right as the bottom fell out of the economy, according to Harris. People stopped paying attention, he said, and eventually Menino pressed ahead with development of the area with very few fair housing requirements. 

“Boston had the opportunity to create a whole new neighborhood. We could have had a neighborhood that belonged to the city and that attracted people from all across the city instead of just South Boston,” said Harris. “The Seaport was eventually developed into the white, gentrified enclave it is now.” 

But problems continued. Harris conducted a study in 2004 that discovered that nearly half of Black and Latino homebuyers purchased homes in just seven of the 126 communities in Greater Boston. Harris attributed this to Black homeowners being shown fewer homes in fewer areas by some real estate agents. 

While this may not directly have contributed to less Black homeownership, it shows how certain discriminatory practices can ultimately limit Black homeownership and other housing opportunities. 

A recent study by Suffolk University Law School found some rental real estate agents engaging in similar practices to those Harris found in 2004. Agents used discriminatory practices when showing Black renters apartments over 70 percent of the time. Those practices included showing Black renters fewer apartments, not offering the same rental incentives they offered to white people looking at the same apartments and even inexplicably cutting off contact with some Black prospective renters. 

The Massachusetts Association of Realtors and the Greater Boston Real Estate Board both condemned the discrimination uncovered in the Suffolk study, and urged more consumer education so wrongdoers would be more frequently reported to state regulators. 

Outdated Zoning  

The Boston Foundation’s Gupta also blames antiquated zoning laws in Massachusetts for the issue. 

For instance, only single-family construction allowed by right on large lots in many communities in Massachusetts.  

That means if a developer wants to build two, three or four homes on a lot, which would make the homes cheaper, they would need to obtain a zoning variance or special permit from the community. That makes the building process more expensive and more susceptible to rejection, driving up the prices most developers will charge. 

“Large-lot, single-family zoning has essentially had the same impact of keeping households of color from being able to purchase homes in suburban communities,” Gupta said. 

Despite some general improvement in Black homeownership rates nationally, Harris said rising home prices in the Greater Boston area only exacerbate the problem, making it harder for many Black prospective homebuyers to afford a down payment. 

Both Harris and Gupta believe that it will take a coordinated, comprehensive and multi-faceted approach to make a difference in this decades-old problem. 

“We have to find ways where we can reach more Black households and households of colors in our programs and policies, but also be very deliberate about it and understand why and evaluate whether we can achieve the intended impact,” said Gupta. “There’s no one thing; it’s complex. But unless we are intentional about addressing equity, we risk perpetuating the inequities of the past. For too long, we have danced around the issue.”