Homeowners in predominantly black communities are twice as likely to be underwater on their mortgages as home owners in mostly white communities, according to a new Zillow analysis released Wednesday.
Nationally, the negative equity rate in the third quarter of 2016 was 10.9%. In Census tracts where the majority of residents are black, the negative equity rate was 20%, while in tracts where most residents are white, the rate was 9.9%. In Census tracts where the majority of people are Hispanic, 12% of homeowners were underwater. In places where there was no racial majority, 11.9% of homeowners were in negative equity.
According to Zillow, after the housing bubble burst in 2007, homes in predominantly black and Hispanic communities lost more value than those in Asian or white neighborhoods. While strong home value appreciation during the recovery has helped many homeowners resurface on their mortgage debt, black and Hispanic communities have not had as strong of a recovery.
"Negative equity is not an equal opportunity offender, with certain markets still being more affected than others," said Zillow Chief Economist Dr. Svenja Gudell. "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."