The Black Homeownership Gap: A Fair Housing Leader’s Solutions

Down payment assistance and housing laws are highlighted by the president and CEO of the National Fair Housing Alliance.
Linda Bell
By Linda Bell 
Edited by Beth Buczynski

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The Black-white homeownership gap is larger today than it was in 1968 when the Fair Housing Act, which outlawed discrimination when Americans buy or rent a home, apply for a mortgage or seek housing assistance, was signed, according to a 2020 report from the National Fair Housing Alliance.

Lisa Rice, president and CEO of the NFHA — a national organization dedicated to ending discrimination in housing — is one of the diverse voices working to identify strategies and solutions to address this disparity.

NerdWallet asked Rice to share how she got involved in fair housing, her perspectives on the homeownership gap and the changes that could improve opportunities for Black Americans.

Lisa Rice's lifelong pursuit of fair housing

Lisa Rice smiles at the camera in a close-in portrait

Lisa Rice

In 1963, while waiting for her birth, Rice's parents decided they wanted to buy a home. Her mother picked Sylvania, which was then an all-white suburb of Toledo, Ohio.

"When she connected with the white real estate agent, the agent told her that they couldn’t show her a house there," Rice says. "The agent even shared with her that if she showed homes in this area, she could lose her license."

Rice's family was directed to the Parkside Extensions neighborhood in Toledo, where her parents faced another obstacle. They couldn’t get a loan to buy the home they wanted, as the demographics of the area were changing from white to Black, a sign of risk to traditional lenders. This was redlining in action, and without other options, her parents were forced to get a loan with a higher interest rate from a subprime lender.

"Everybody was squarely middle income or upper income, but that didn’t matter," Rice says. "It was the complexion of the people that were living in the home."

Rice’s connection with fair housing continued in her teenage years. When she was 15, Rice interned at the Toledo Fair Housing Center.

"With that internship, I got bitten by the fair housing bug," she says. Years later, she would become the organization’s CEO.

And Rice has never looked back. She has over 35 years of experience in the fair housing industry. In her current role at the NFHA, Rice leads efforts to expand equal housing opportunities for millions of Americans.

With her extensive background and expertise, we asked Rice to share the biggest barriers to Black homeownership and how she thinks these should be addressed. (Responses have been edited for length and clarity.)

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Barriers to Black homeownership

According to Rice, the Black homeownership gap in the U.S. is sustained by several factors:

The impact of credit invisibility

The biggest barrier is access to credit because people of color disproportionately live in "credit deserts," Rice says. Instead of bank branches, there are payday lenders, check cashers and buy-here, pay-here lenders. Accessing credit from those providers sets people up to be credit invisible or have artificially low credit scores.

The racial wealth divide

Rice says the second major barrier is saving money for a down payment. Americans of color haven’t had the same opportunity to build intergenerational wealth that their white counterparts have had. The wealth gap precludes people from access to homeownership.

The burden of student loan debt

Student loan debt keeps a lot of borrowers of color from being able to access credit, Rice says. Because Black families don’t have access to wealth, they end up having to borrow more to go to college. Then, the student loan debt prohibits Black Americans from being able to purchase a home.

Limited affordable housing options

The affordable housing supply nationwide is restricted, Rice says. In the aftermath of the Great Recession, many affordable homes were purchased by corporate investors instead of being sold to owner-occupants after foreclosure. There are also a lot of homes that the housing industry calls "naturally occurring affordable homes," which are homes valued under $100,000. But lenders are reluctant to offer the small-dollar mortgages needed to buy them.

Solutions to increase Black homeownership

To reduce the Black homeownership gap, Rice suggests focusing on:

Access to credit

"We have to change the financial services paradigm so that consumers of color can access credit," Rice says. Financial services companies have to play a role, such as actively bringing in consumers that aren't already in their orbit. She suggests building new loan products for people who might have limited credit histories or may need to use alternative credit data.

Down payment assistance

Rice acknowledges it's a big barrier if people don’t have a down payment to buy a home. "We are trying to execute President Biden’s campaign promise of providing down payment assistance," she says. "We are working on different approaches so that people of color can take advantage of homeownership and other wealth-building tools."

Better use of artificial intelligence

The technology used in the financial space — automated underwriting systems, credit score systems, risk-based pricing systems — manifest bias and discriminate against people of color, Rice says. It will take a major investment by the financial services industry to overhaul and redesign the system so that it's fair for all Americans. Rice said the NFHA has taken a leadership role by implementing its Tech Equity Initiative to help eliminate bias in the financial services and housing sector.

Enforcement of existing fair housing laws

Laws are valuable only if they’re put into action, and Rice says, "We haven’t had full and complete enforcement of the laws that are on the books, the Fair Housing Act, The Equal Credit Opportunity Act and the Community Reinvestment Act. We really need to beef up enforcement of those laws."

Rice highlighted the ECOA’s Special Purpose Credit Programs, which encourage lenders to develop and design lending products to meet the needs of underserved groups.

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