People of color are taking out a rising share
of mortgages because an increasing share of them are of prime
homebuying age, and because America is becoming more diverse.
They’ve also seen larger income gains than white people in recent
years.
(NASDAQ: RDFN) —The share of U.S. mortgages taken out by white
homebuyers has declined over the last five years, while the share
taken out by Hispanic, Black and Asian homebuyers has ticked up.
That’s according to a new report from Redfin (redfin.com), the
technology-powered real estate brokerage.
The report is based on a Redfin analysis of 2018-2023 Home
Mortgage Disclosure Act (HMDA) data covering mortgage originations
for primary homes. This analysis does not cover originations for
investment properties or second homes.
Just under two-thirds (62.2%) of new mortgages issued in 2023
went to white homebuyers. While that’s a far higher share than any
other group, it’s down from 64% in 2022 and 70.4% in 2018. It’s
also now more in line with the country’s demographics, as 59.5% of
the U.S. population is white (as of 2022, the most recent year for
which data is available).
Meanwhile, the share of new mortgages taken out by Hispanic
buyers increased to 14% in 2023 from 12.6% in 2022 and 11% in 2018.
Black buyers represented 8.7% of new mortgage holders last
year—little changed from 8.6% in 2022 but up from 7.1% in 2018.
Still, these figures lag demographic trends, as 18.8% of the U.S.
population is Hispanic and 12.2% of the population is Black.
Asian buyers took out 8.2% of new mortgages in 2023, unchanged
from 2022 but higher than the 6.4% rate in 2018. Asian mortgage
holders are tracking slightly ahead of demographic trends, as 5.9%
of the U.S. population is Asian.
All in all, people who are Hispanic, Black, Asian or two or more
races took out 37.8% of new mortgages last year, up from 36% in
2022 and 29.6% in 2018.
“The pool of homebuyers taking out mortgages is becoming less
white because America is becoming more diverse, and many people of
color are in their prime homebuying years,” said Redfin Senior
Economist Elijah de la Campa. “The racial wage gap, while still
sizable, has also been shrinking. That has made homeownership more
feasible for some Black and Hispanic people, though they’re still
significantly less likely to own homes than white people.”
Hispanic, Black and Asian People Have Seen Larger Income
Gains Than White People
The median annual income for Hispanic people in the U.S. was an
estimated $69,000 in 2023, up 40.2% from 2018. That’s much larger
than the gain for white people, whose median income rose 31% to an
estimated $86,000. Black and Asian people also saw bigger increases
in estimated incomes, which climbed a respective 34.7% to $54,000
and 36.4% to $114,000.
The racial wage gap remains large, but has shrunk in recent
years in part due to a tight labor market. When the labor market is
tight, employers are often less selective and look for candidates
outside of their networks, which provides opportunities for
marginalized communities.
It’s worth noting that the unemployment rate in the Black
population has ticked up in recent months.
America Is Becoming More Diverse
White people make up 59.5% of the U.S. population (as of 2022),
down from 61.6% in 2018, 69.7% in 2000 and 84.1% in 1970.
Meanwhile, people of color have taken up a growing share of the
population, with Hispanic people seeing the biggest uptick. They
represent 18.8% of the U.S. population, up from 18% in 2018, 12.6%
in 2000 and 4.1% in 1970.
The Black share of the population is the exception, stagnating
in comparison; at 12.2%, it's little changed from 12.4% in 2018 and
12.1% in 2000, but is up slightly from 11% in 1970.
The number of people in the U.S. who identify as white (a
different metric than the share) recently declined for the first
time since 1790.
“In addition to lower fertility and immigration, much of this
loss is attributable to the continued aging of the white
population. Fewer births and more deaths resulted in a natural
decrease (more deaths than births) for the 2010s decade, even
before the COVID-19 pandemic,” William Frey, a senior fellow at the
Brookings Institution, wrote in a 2021 report. “In addition, the
rise of multiracial marriages has led to an increase in the number
of young people who identify as mixed race rather than white alone.
The new census results also show a substantial rise in the number
of Americans that indicated belonging to two or more racial
groups.”
A Rising Share of Hispanic, Black and Asian People Are of
Prime Homebuying Age
More than one in five (21.1%) Hispanic people living in the U.S.
are of prime homebuying age (25-34), up from 20.6% in 2018 and
16.5% in 2000. Meanwhile, 13.7% of Black U.S. residents are of
prime homebuying age, up from 13.4% in 2018 and 12.6% in 2000. The
share has also ticked up among Asian people, to 7% from 6.9% in
2018 and 4.9% in 2000.
But the opposite is true for white people, 54.4% of whom are of
prime homebuying age. While that’s a higher share than any other
group, it’s down from 56.6% in 2018 and 64.1% in 2000. Please note
that the most recent year in this dataset is 2022.
The most common age among white people in the U.S. is 60—far
beyond prime homebuying age. That’s roughly double the most common
ages of Black and Asian people and five times higher than the most
common age of Hispanic people.
White People Are Buying Fewer Homes Than They Used to
White people took out 1,582,643 mortgages in 2023, down 22.1%
from a year earlier and down 31.3% from 2018. By comparison,
Hispanic people took out 355,757 mortgages, down just 11.1% year
over year and down 1.3% from 2018. Asian people took out 209,085
mortgages, down 19.9% year over year and down 0.5% from 2018. And
Black people took out 220,410 mortgages, down 19.4% from a year
earlier and down 5.7% from 2018.
Home purchases have dropped across the board over the past year
due to rising mortgage rates and high home prices, but it’s notable
that the declines were more severe among white people.
Most white people already own homes, meaning there’s not a lot
of room for growth. Nearly three-quarters (74%) of white people in
the U.S. own homes, compared with 62.2% of Asian people, 49.9% of
Hispanic people and 45.7% of Black people.
While white people are the most likely to be homeowners, it’s
worth noting that their homeownership rate has stagnated in recent
years while the homeownership rates for Hispanic, Black and Asian
people have climbed—helping to narrow the gap slightly.
To view the full report, including charts and methodology,
please visit:
https://www.redfin.com/news/home-mortgages-by-race-2024
About Redfin
Redfin (www.redfin.com) is a technology-powered real estate
company. We help people find a place to live with brokerage,
rentals, lending, title insurance, and renovations services. We run
the country's #1 real estate brokerage site. Our customers can save
thousands in fees while working with a top agent. Our home-buying
customers see homes first with on-demand tours, and our lending and
title services help them close quickly. Customers selling a home
can have our renovations crew fix it up to sell for top dollar. Our
rentals business empowers millions nationwide to find apartments
and houses for rent. Since launching in 2006, we've saved customers
more than $1.6 billion in commissions. We serve more than 100
markets across the U.S. and Canada and employ over 4,000
people.
Redfin’s subsidiaries and affiliated brands include: Bay Equity
Home Loans®, Rent.™, Apartment Guide®, Title Forward® and
WalkScore®.
For more information or to contact a local Redfin real estate
agent, visit www.redfin.com. To learn about housing market trends
and download data, visit the Redfin Data Center. To be added to
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version on businesswire.com: https://www.businesswire.com/news/home/20240503702792/en/
Redfin Journalist Services: Kenneth Applewhaite, 206-414-8880
press@redfin.com
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