Homeowners in minority neighborhoods started out with the lowest level of home equity but saw the greatest percentage gain in the last six years, according to a new Redfin study.
The study analyzed home equity levels in white, minority and mixed-race neighborhoods in the 16 most populated metros.
"Home prices over the last six years rose most steeply in minority communities, and unlike in past booms when Americans just borrowed more and more money, these price gains led to real increases in wealth for homeowners of color," said Redfin CEO Glenn Kelman.
The study also revealed that ZIP codes with mostly white residents had the lowest percentage gains in equity, but the largest increase in absolute dollars.
The disparity in home equity values also grew between white and minority neighborhoods, the report showed. In 2012, the difference in average home equity was $58,000, but in 2018 that grew to $94,000.
"But even though homeowners in mostly minority communities had the largest percentage gains in home equity, it was the folks living in mostly white neighborhoods who had the largest dollar gains, just because they had so much more home equity at the beginning of the recovery,” Kelman said.
“This just goes to show that, even as a strong market broadly benefits homeowners, it's still very hard for people starting with less money ever to catch up,” Kelman continued. “On an absolute-dollar basis, homeowners in minority communities became wealthier, but still fell further behind.”
Riverside, California, was the only area in the study where minority communities experienced the largest equity gain in absolute dollars, followed by mixed race and then white areas.
Minority ZIP codes in Denver saw the biggest percentage gains, up 452%, according to the study.
While the gap between white and minority equity gains widened in most cities, two (Miami and Riverside) saw the gap narrow, while Boston remained unchanged.