Report on the Racial Divide in Home Equity and its Implications for Sustainable Development Goals

This report analyzes the significant racial disparities in homeowner equity within the United States, framing the issue within the context of the United Nations Sustainable Development Goals (SDGs). The findings indicate that systemic barriers prevent equitable wealth accumulation through homeownership, directly undermining progress toward SDG 10 (Reduced Inequalities), SDG 1 (No Poverty), SDG 8 (Decent Work and Economic Growth), and SDG 11 (Sustainable Cities and Communities).

Executive Summary: A Challenge to SDG 10 (Reduced Inequalities)

Context of Unprecedented Equity Growth

In the fourth quarter of 2024, total homeowner equity reached approximately $35 trillion, an increase of 60 percent since 2019. This translates to an average of $400,000 in equity per homeowner. While this growth appears positive, it masks a severe and persistent racial divide that challenges the core principles of SDG 10.

The Core Disparity

The benefits of this historic growth are not being shared equally. Homeowners of color, particularly Black and Hispanic households, face significant obstacles in both accumulating and accessing home equity. This disparity perpetuates a cycle of economic inequality, limiting opportunities for wealth creation and financial stability.

• Jason Richardson of the National Community Reinvestment Coalition (NCRC) notes, “Only a small portion of Black adults have any home equity and, among those who do, the equity is generally lower because their homes are valued less.”
• Federal Reserve Bank research confirms that loan denial rates for Black homeowners are double those of white homeowners, impeding access to accumulated wealth.

Systemic Barriers to Equitable Wealth Accumulation

Inequalities in Home Equity Acquisition

The equity gap begins at the point of purchase, creating an immediate disadvantage that contravenes the goal of reducing inequality (SDG 10) and ensuring access to assets for the poor and vulnerable (SDG 1).

• Initial Equity Stakes (2023): According to NCRC research, the average white homebuyer gained over $130,000 in equity at closing. This compares to approximately $86,000 for Hispanic buyers and only $69,000 for Black buyers.
• Down Payment Challenges: Black and Hispanic families often struggle to meet minimum down payments, limiting their initial equity and increasing long-term costs.
• Intergenerational Wealth: Alexander Hermann of Harvard’s Joint Center for Housing Studies (JCHS) highlights that white households more frequently have access to familial financial support (“the bank of mom and dad”), a resource less available to Black and Hispanic households.

Persistent Income and Wealth Gaps

The ability to purchase a home and build equity is intrinsically linked to income and overall wealth, areas where disparities directly impact SDG 8 (Decent Work and Economic Growth).

• Wealth Disparity (2022): The typical white household held approximately $285,000 in wealth, compared to $61,600 for Hispanic households and $44,900 for Black households.
• Income Stagnation: Between 2019 and 2022, wage and salary income for Black and Hispanic families remained nearly flat, while it grew significantly for white families.
• Affordability Crisis: A Bankrate study found that a salary of nearly $117,000 is now required to afford a typical home, pricing many families of color out of the market and denying them access to a primary wealth-building tool.

Institutional Failures and Discriminatory Practices

The racial equity gap is exacerbated by institutional practices that fail to ensure fairness and justice, running counter to the aims of SDG 16 (Peace, Justice and Strong Institutions) and SDG 11 (Sustainable Cities and Communities).

Discriminatory Lending and Loan Denials

Despite fair housing laws, discriminatory practices persist, limiting access to credit for communities of color.

• Subtle Discrimination: NCRC research reveals that Black and Hispanic loan applicants are often discouraged from applying or are treated differently than white applicants with similar profiles.
• High Denial Rates for Equity Loans: A study by the Federal Reserve Bank of Philadelphia found that between 2018 and 2021, the denial rate for Home Equity Lines of Credit (HELOCs) was 62 percent for Black applicants, nearly double the 32 percent rate for white applicants.
• Economic Impact: Over four years, Black and Hispanic homeowners were unable to access over $4 billion in equity due to denials for HELOCs, home equity loans, and cash-out refinances.

Inaccurate and Biased Home Appraisals

Biased property valuations in communities of color systematically devalue assets, directly undermining wealth creation and the development of sustainable communities (SDG 11).

• Valuation Gap: Research from Washington University shows that homes in white neighborhoods are appraised at double the value of comparable homes in communities of color.
• Wealth Suppression: Systematic undervaluation limits the equity families can build and leverage for economic opportunities, creating a cycle of disadvantage.
• Market Distortion: A Brookings Institution report found that 10 percent of appraisals in majority-Black neighborhoods are inaccurate, contributing to market instability and the risk of negative equity.

Socio-Economic Ramifications and SDG Implications

Concentrated Risk and Financial Vulnerability

The heavy reliance on home equity as a primary source of wealth for minority households creates significant financial risk, threatening progress on SDG 1 (No Poverty).

• Wealth Concentration (2022): Home equity constituted 44 percent of Black households’ wealth and 45 percent of Hispanic households’ wealth, compared to just 19 percent for white households.
• Recession Vulnerability: This lack of asset diversification means that a housing market downturn could be disproportionately devastating to the wealth of Black and Hispanic communities.

Barriers to Economic Opportunity and Stability

The inability to access home equity prevents families from making investments that support long-term well-being and economic growth, affecting multiple SDGs.

• Life Opportunities: Equity is often used for college tuition, business startups, and vital home repairs. Lack of access curtails these opportunities.
• Aging in Place: Linna Zhu of the Urban Institute notes that older Black homeowners without access to equity may be unable to afford necessary home modifications or repairs, threatening their housing stability and worsening the racial wealth gap later in life. This directly impacts goals for safe and adequate housing under SDG 11.

A Framework for Action Aligned with the 2030 Agenda

Policy Recommendations for Achieving Equity

Addressing the racial home equity divide is essential for achieving a more sustainable and equitable future. The following actions are required to align with the 2030 Agenda for Sustainable Development:

1. Promote Decent Work and Economic Growth (SDG 8): Expand access to higher-paying jobs and address wage stagnation for communities of color to provide the foundational income needed for homeownership.
2. Reduce Inequalities (SDG 10): Increase funding and accessibility for down payment assistance programs to close the initial equity gap for first-time homebuyers of color.
3. Ensure Justice and Strong Institutions (SDG 16): Strengthen the enforcement of fair lending laws to combat discriminatory practices in mortgage and home equity lending. Address and eliminate appraisal bias through improved regulation and oversight.
4. Advance Quality Education (related to SDG 4): Boost financial literacy and education initiatives to ensure all homeowners understand the equity they possess and how to leverage it responsibly for financial security.

Conclusion: Advancing Sustainable Development Through Housing Equity

The racial divide in home equity is more than an economic issue; it is a critical barrier to sustainable development. The accumulation of $35 trillion in homeowner equity represents a significant national resource, but its inequitable distribution undermines progress on key SDGs, especially SDG 10 (Reduced Inequalities). Ensuring that all communities have a fair opportunity to build and access home equity is fundamental to creating a just, resilient, and prosperous society for all.

Analysis of Sustainable Development Goals in the Article

1. Which SDGs are addressed or connected to the issues highlighted in the article?

• SDG 1: No Poverty
• SDG 8: Decent Work and Economic Growth
• SDG 10: Reduced Inequalities
• SDG 11: Sustainable Cities and Communities

2. What specific targets under those SDGs can be identified based on the article’s content?

• SDG 1: No Poverty

  • Target 1.4: By 2030, ensure that all men and women, in particular the poor and the vulnerable, have equal rights to economic resources, as well as access to basic services, ownership and control over land and other forms of property…
    
    Explanation: The article focuses on the racial divide in homeownership and home equity, which represents a critical economic resource and form of property. It highlights that Black and Hispanic households face significant barriers to owning property and building wealth through it, directly relating to the goal of ensuring equal rights to economic resources and ownership. The article states, “to build equity, you first need to own a home,” and then details the persistent gap in homeownership rates.

• SDG 8: Decent Work and Economic Growth

  • Target 8.5: By 2030, achieve full and productive employment and decent work for all women and men… and equal pay for work of equal value.
    
    Explanation: The article directly links the inability to afford homes to income disparities. It notes, “Between 2019 and 2022, while wage and salary income grew significantly for white families, it stayed almost flat for Black and Hispanic ones.” This lack of equal income growth is a major barrier to homeownership and wealth creation, connecting to the target of equal pay and economic progress for all.
  • Target 8.10: Strengthen the capacity of domestic financial institutions to encourage and expand access to banking, insurance and financial services for all.
    
    Explanation: A central theme of the article is the unequal access to financial services for people of color. It explicitly states that “Black homeowners also have a harder time borrowing against their equity stake, with loan denials double those of white homeowners.” Furthermore, it details how Black and Hispanic applicants are denied HELOCs at significantly higher rates, preventing them from accessing their own wealth and indicating a failure of financial institutions to provide equal access.

• SDG 10: Reduced Inequalities

  • Target 10.2: By 2030, empower and promote the social, economic and political inclusion of all, irrespective of… race, ethnicity… or other status.
    
    Explanation: The entire article is an exposé on the lack of economic inclusion for racial minorities in the U.S. housing market. It describes how Black and Hispanic households are “locked out of wealth” and face systemic barriers that prevent them from participating equally in building home equity, a key driver of financial stability. The wealth gap data—”the typical white household had approximately $285,000 in overall wealth… more than six times that of Black households ($44,900)”—is a stark illustration of this exclusion.
  • Target 10.3: Ensure equal opportunity and reduce inequalities of outcome, including by eliminating discriminatory laws, policies and practices…
    
    Explanation: The article points to persistent discriminatory practices as a key reason for the racial divide. It mentions the legacy of “redlining” and describes modern-day discrimination, such as lenders discouraging Black or Hispanic borrowers and biased home appraisals where “homes in white neighborhoods are appraised at double the value of homes in communities of color.” The call to strengthen “fair lending enforcement” directly aligns with this target.

• SDG 11: Sustainable Cities and Communities

  • Target 11.1: By 2030, ensure access for all to adequate, safe and affordable housing…
    
    Explanation: The article underscores the challenge of housing affordability as a primary barrier to building equity. It finds that it “takes a six-figure salary — nearly $117,000 — to afford a typical single-family home today,” which prices many Black and Hispanic families out of the market. This lack of access to affordable housing is the first step in the cycle of inequality discussed, making this target highly relevant.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

• Homeownership Rate by Race: The article mentions a persistent “25-percentage-point gap” in homeownership between Black and white households. This is a direct indicator for measuring access to property (Target 1.4) and housing (Target 11.1).
• Wealth and Income Levels by Race: The article provides specific figures on the racial wealth gap (e.g., white household wealth is six times that of Black households) and notes that wage growth has been “almost flat for Black and Hispanic” families while growing for white families. These are key indicators for measuring economic inclusion (Target 10.2) and progress toward equal pay (Target 8.5).
• Loan Denial Rates by Race: The article cites research showing that HELOC denial rates for Black applicants (62%) are almost double those for white applicants (32%). This is a direct indicator for measuring access to financial services (Target 8.10) and discriminatory practices (Target 10.3).
• Home Appraisal Values by Neighborhood Demographics: The finding that “homes in white neighborhoods are appraised at double the value of homes in communities of color” serves as an indicator of systemic bias and inequality of outcome (Target 10.3). The article also notes that “10 percent appraisals in majority-Black neighborhoods are valued on the wrong side of the contract price,” providing another measurable indicator of bias.
• Proportion of Wealth Held in Home Equity by Race: The article states that home equity comprises 44% of Black household wealth versus 19% for white households. This indicates a disparity in asset diversification and economic vulnerability, relevant to measuring economic inclusion and resilience (Target 10.2).
• Housing Affordability Metrics: The mention that an income of “nearly $117,000” is needed to afford a typical home is an indicator of the affordability crisis, which disproportionately affects lower-income groups and is relevant to Target 11.1.

4. Table of SDGs, Targets, and Indicators

Source: aol.com