Memphis, Tennessee, may be a good city to snag a plate of dry rub barbecue ribs, but new data suggests it’s not an ideal place for Black Americans looking to build wealth through homeownership.
Shelby County, Tennessee, where Memphis sits, has one of the nation’s largest gaps in home values between Black residents and all other owners in the county, according to recent data from the Urban Institute. Shelby and Jefferson counties in Alabama (the latter is home to Birmingham), both have a 24% gap. There’s also a gap in values of 20% or more for Black homeowners in Wayne County, Michigan; Essex County, New Jersey; and Fulton County, Georgia — where Detroit, Newark, and Atlanta sit, respectively.
For its study, the Urban Institute examined the nation’s largest 100 U.S. counties that had at least 5,000 Black residents. The research drew from 2022 U.S. Census Bureau data that also indicated Black homeownership had increased nationally from 41.2 percent in 2015 to 44.3 percent.
In general, homes owned by Black Americans have been valued lower, in part, because of "decades of systemic racism in housing policies and practices, and disproportionate negative impacts of crises and economic shocks on Black families that have left them with lower homeownership rates and lower-value homes," the Urban Institute researchers said.
The gap in Shelby County exists partly because property investors from the East Coast have been buying blighted homes in the predominantly Black neighborhoods around Memphis, said Lisa Nelson, an area real estate agent with Exit Southern Charm Realty. Investors are buying the homes "sight unseen" and are not renovating them, tanking the values of neighboring properties, Nelson said.
"And even individuals who renovated and fixed up their homes, they can't get that much in value because you have all these other homes that's sucking it away," Nelson said in an interview.
The historical impact of redlining, the discriminatory practice of denying a person credit based on where they live, has contributed to why Black-owned homes in Shelby County are lagging in value, according to Nelson. A lack of funding for infrastructure and appraisal bias are also factors.
But there are signs in the market offering hope that the value gap could narrow soon, she said. A new wave of home construction lenders has set up shop in Memphis, and Black developers such as Rasheedah Jones are getting the funding they need to build new homes across Memphis neighborhoods. Nelson said that once a crop of new homes is built, values in Black communities should increase.
In Shelby County, the average Black resident's home value was $215,887 compared to $369,937 for the overall total, the study indicated. In DeKalb County, Georgia (home of Decatur), the gap was $301,000 for Black-owned homes compared to $502,000 overall.
There is no home value gap for Black residents in Ventura County, California and the Bronx, New York, the Urban Institute reported. Black homes in Bernalillo County, New Mexico (the home of Albuquerque) and Prince George's County, Maryland, have greater values than their peers, the study indicated. In Prince George's for example, the typical Black home was valued at $456,009 while the county's average was $409,845.
Financial support could close the gap
The study also shared community-specific ideas that could help increase home values for Black neighborhoods.
“For example, in Williamson County (Texas), where the Black homeownership rate has fallen significantly, providing financial support such as down payment assistance might be helpful,” the study concluded. “In DeKalb County (Georgia), where homeownership has risen but Black households live in less expensive homes, providing financial support for renovations could increase home values for Black homeowners.”
Black homeownership is in a state of emergency, according to a study from the National Association of Real Estate Brokers. The NAREB said the homeownership gap between Black and White Americans was 30 percentage points in 2022, higher than the 23.8 percentage in 1970 — two years after the Civil Rights Act was broadened to outlaw housing discrimination.
Homeownership rates have fallen for Black Americans, partly because a greater share of Black mortgage applicants was denied home loans compared to white applicants and because Black millennials applying for home loans fell roughly 21% between 2022 and 2023, further harming homeownership rates, the NAREB said in a recent study.
Urban Institute researchers said it's important to boost Black homeownership and reduce the home value gap because all homeowners in America will benefit.
"By closing homeownership gaps and recognizing homes at their rightful value, more people will be likely to enter the housing market," John Walsh, a research associate who co-authored the study, said in an emailed statement. "Maintaining the flow of these dollars is not only important for local Black neighborhoods, but also for the national economy as a whole."