The racial homeownership gap in the Twin Cities is the largest in the nation, and it's been getting worse for Black families.
Black families own homes at less than one-third the rate of white families, a report from the Urban Institute, published earlier this month, says.
The report looked at the homeownership gaps in Hennepin and Ramsey counties, finding that it has gotten worse over the past 20 years, causing the Black-white homeownership gap to grow 10 percentage points from 2000-2018.
The Urban Institute, which looked at census data and property records, found that between 2000-2018, white homeownership in the Twin Cities remained relatively stable at around 70%, while Black homeownership declined, falling from 31% in 2000 to 21% in 2018. Latino homeownership also declined during that time, but not as dramatically.
This is despite the number of Black households in the area growing by more than 30,000 during that time. The report notes only about 2,000 of those new Black households became homeowners.
"That means a more diverse region has not yet had more access to home buying, so low- and moderate-income Black families are more likely to rent and thus face the possibility of eviction," the Urban Institute said.
The report found the places where Black homeownership is declining the fastest are in predominantly white neighborhoods and areas where gentrification is occurring, with the majority of these neighborhoods in the areas surrounding downtown Minneapolis and St. Paul.
In these neighborhoods, Black renters and homeowners are more likely to be displaced, with median rents increasing 19% and the Black-white homeownership gap going up by more than 10 percentage points between 2000 and 2018.
Here's a map of the neighborhoods experiencing displacement:
This is also happening in places where out-of-state investors bought up single-family homes during the Great Recession and converted them to rentals, making fewer homes available for would-be Black homeowners in the most racially diverse and economically challenged neighborhoods, the report found.
The study says the number of single-family rental units in the Twin Cities more than doubled from 2005 to 2020, while the number of single-family homes grew only 8% over that period. And the number of single-family rental units owned by investors grew from about 4% in 2005 to 14% in 2020.
The two largest single-family rental unit owners — Invitation Homes and Front Yard Residential Corporation — own 521 and 383 homes, respectively, in the Twin Cities, the report adds.
As a result, Black families became renters and couldn't build their wealth through homeownership. Black families' wealth is more closely tied to homeownership than white families, the report notes.
This report comes as nonprofits and policymakers are focused on how racial economic inequities are tied to homeownership, and amid a crazy housing market in the Twin Cities, which has seen a shortage of houses on the market and homes going for thousands more than asking price.
The report says these trends in the Twin Cities can help inform policymakers who are aiming to create a more equitable and sustainable housing landscape, noting changes in local and regional policies can reduce homeownership inequities in the Twin Cities if "designed intentionally and implemented effectively."
Among them: additional local and state funding for homeownership counseling; increase downpayment assistance support for low-income families; dedicate new city, county and state funding to build and renovate affordable housing; stabilize rent and strengthen anti-eviction laws.
The Urban Institute is based in Washington, D.C., and is a liberal-leaning nonprofit. For the report, it partnered with the Twin Cities-based organizations, including the Alliance, the Family Housing Fund and the Center for Economic Inclusion.