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The age of the young homebuyer
Apart from income and education, age was also a factor. The Urban Institute’s analysis found that between 2019 and 2021, the proportion of young homebuyers started to grow across all racial and ethnic groups. Homebuyers younger than 45 increased from 51% in 2019 to 55% in 2021. This increase was most apparent for Black homebuyers younger than 45 (+5.3%), compared with Latino homebuyers (+4%) and White homebuyers (+3.5%) in the same period.
The Urban Institute explained that millennials, who had just come out of the Great Recession in the 2000s, suffered a homeownership capital lag at the age the previous two generations had typically begun closing deals on their first homes. Millennials were the largest and most diverse generation, so this lag informed the widening of the racial homeownership gap.
After years of delayed homeownership, however, millennials were finally starting to catch up.
Post-pandemic progress undone
Despite the encouraging numbers observed from 2019 to 2021, the Urban Institute said that the surge in Black and Latino homeownership then was not enough to match the pace at which interest rates subsequently rose. The first-time homebuyer share dropped from an encouraging one-third (34%) in 2021 to just over one-fourth (26%) in 2022, and the median age of first-time homebuyers reached 36 the same year – a record high. The proportion of Black homebuyers declined by 3%, while Latinos saw a 1% increase. Both groups lost to the share of White homebuyers, which grew by 6% in 2022.
“From these preliminary data, it is clear that mitigating racial disparities in homeownership, especially in the current high-interest-rate environment, requires well-designed and well-implemented solutions,” the Urban Institute said. “Although the low-rate environment and other economic conditions during the pandemic unleashed some pent-up housing demand among households of color, the majority of these households are still renters and face barriers to homeownership.”
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