Black Homeowners Pay Over $13,000 More Than White Homeowners, New Study Finds

Homeownership is one of the critical components of creating generational wealth. Due to a history of racist policies—from lack of access to lending opportunities for home loans to redlining districts—Black homeowners face their own unique hurdles to securing a new home. A study conducted by the Massachusetts Institute of Technology (MIT) shows new evidence suggests that Blacks pay over $13,000 more for their homes compared with their white counterparts.

The MIT Study, The Unequal Costs of Black Homeownership, found that Black homeowners pay higher mortgage rates at origination, more in mortgage insurance premiums, and higher property taxes.

The data shows that interest charges for Black buyers on home purchase loans were $250 more a year resulting in over $11,000 in lost retirement savings in comparison with their white counterparts. Also, because Black homeowners have less access to affordable refinancing options, Black homeowners paid on average $475 more per year than white homeowners resulting in almost $20,000 loss in retirement savings.

Additionally, the study cites higher property taxes and the extra burden they put on Black residents that white residents do not face. “The authors identify large tax assessment areas and an appeal process that tends to benefit white homeowners as the predominant factors resulting in the higher relative property tax burden on Black homeowners,” the study found. “They suggest that a smaller assessment area, one at the zip-code level, would reduce racial inequality in property tax assessments by at least 55-70%.”

The study also concluded that during periods of economic downturn, Black homeowners were more likely to feel the effects, unlike their white counterparts. “These capital standards have the effect of placing the burden of staving off a repeat of the 2008 Great Recession on Black homeowners, even though Black homeowners were primarily the victims of the crisis, not its cause,” the study added.

“Nevertheless, the financial recovery has Black homeowners paying more for their mortgages because of the misdeeds of lenders and the failure of policymakers to stop bad lending and prevent unnecessary foreclosures.”