January 22, 2017
By Jacob Passy
Homeowners in predominantly black and Hispanic neighborhoods are more likely than their counterparts in predominantly white neighborhoods to be underwater on their mortgages, according to a report from Zillow.
Zillow found that the negative equity rate in census tracts where the majority of residents are black was 20% during the third quarter, versus 9.9% for majority white census tracts and the national rate of 10.9%. Similarly, the negative equity rate was also elevated in census tracts that are predominantly Hispanic at 12%.
For census tracts where there was no racial majority, the negative equity rate was 11.9%.
At the metropolitan level, the disparities between predominantly minority neighborhoods and predominantly white neighborhoods become even more pronounced.
For instance, in Detroit the share of homeowners underwater on their mortgages in majority black communities was 35.1%, versus 9.5% for majority white communities. And in Las Vegas, the negative equity rate in majority Hispanic neighborhoods stood at 26.5%, while the rate in predominantly white communities was 13.4%.
"Negative equity is not an equal opportunity offender, with certain markets still being more affected than others," Zillow Chief Economist Svenja Gudell said in a news release. "Our previous research has shown that negative equity is more concentrated among less expensive homes, and now we know that it is also more prevalent in minority neighborhoods than in white communities, which are also trailing in the overall housing recovery. These gaps can and will have long-lasting implications for growth and equality."
Source: National Mortgage News