Racial gap in RI homeownership wider than national average, report says

In Rhode Island, racial disparities in homeownership are more severe than the national average, according to a new report.

The report, released Thursday and authored by Brown School of Public Health academics whose work was funded by United Way of Rhode Island, states that overall, 62% percent of the state's residents own a home, yet only 34% of the state's Black residents are homeowners. By contrast, across the United States, 64% of the population owns homes, while 42% of Black people are homeowners. The data dates back to 2019.

"Homeownership is a primary wealth-building vehicle for everyone in general," said Akilah Dulin, one of the report's authors. "Black people, if they were able to own homes, have the opportunity to in part close the wealth gap, barring any discrimination in home valuation as we know exists and how Black homes are appraised at lower values."

Lending issues

Reasons for the gap in homeownership are many, some dating back decades. During the early-to-mid-20th century, the Federal Housing Administration practiced redlining, stopping banks from offering loans to people in Black neighborhoods. As the report notes, from the 1930s through the 1950s, Black families received a mere 2% of FHA loans.

Lending issues have persisted in recent years, with the City of Providence suing Santander Bank in 2014, accusing it of having drastically cut back on mortgage lending in minority neighborhoods while boosting lending in primarily white areas. Eventually, the suit was dropped and Santander gave out grants to low- and moderate-income residents, among funding other initiatives.

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Racism in banking, housing covenants, and the GI Bill of 1994, which did not award U.S. Department of Veterans Affairs-guaranteed mortgage loans to most Black veterans, are among the list of other historical inequities. Today, issues with loans persist, as Black applicants are more likely to be denied.

Kobe Dennis, another of the report's authors, said it's time leaders "admit that we’re not concentrating on the Black community, that it's lagging immensely as far as homeownership in Rhode Island."

Lack of knowledge, homes and resources for those in Black communities

Dennis is also concerned about what he described as a lack of education about buying a house and knowledge about how to boost one's credit score.

"I’m 50 years old and I’m not ashamed to say I bought my first home at 47, and that’s not because I didn’t have the finances," Dennis said. "It’s because I didn’t have the knowledge base, and no one was offering it. So I was just trying to survive. To me, surviving was just providing a roof over my family’s head."

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According to the report, which cited a mix of articles, academic writing, economic research and other sources, Black people are less likely to be able to afford down payments and have barriers to credit. Even with credit similar to other prospective homeowners, "Black homebuyers are more likely

to be pushed toward subprime and higher-interest mortgage loans compared to White borrowers," the report reads.

Authors also found that Black people are directed to minority neighborhoods, shown fewer homes and offered less help, making the search process all the more difficult.

The report was completed as part of The State of Black Rhode Island, a collaborative project between Brown academics and United Way, which "examines the current state and future direction of the Black community in Rhode Island."

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Not only is the report intended to expose inequities in homeownership, it is intended to offer policy changes.

Among those are developing financing programs for Black homebuyers with lower credit scores, making small-scale mortgage assistance and down-payment help more accessible, and expanding federal programs offered by the FHA and Housing and Urban Development.

"For me personally, it’s about legacy homeownership," Dennis said. "Everyone wants to leave a legacy with their family, their friends and the community. It’s hard to do that when you’re renting because of the instability of renting."