Colorado’s Racial Wealth Gap: Homeownership & Credit

The racial wealth gap – in the United States, but also specifically Colorado – is well-documented. Throughout our own work, the Bell has examined how this gap is present in wage, homeownership, and incarceration data. In this brief, we continue this exploration, specifically looking at COVID’s impact on two important drivers of wealth: homeownership and post-secondary education.

We find that while COVID had little immediate impact on these building blocks of wealth, the pandemic clearly demonstrates the importance of investing in solutions that increase homeownership and post-secondary education for Black, Indigenous, and other Coloradans of color. By advancing targeted, intentional policies to achieve these ends, Colorado can take meaningful action to create a more equitable state.

Pre-Pandemic Trends:

The racial wealth gap is rooted in systemic, intentionally racist policies that have allowed white families to accumulate far more resources than Black, Indigenous, and people of color (BIPOC) families. Prior to the pandemic, the magnitude of the wealth gap was stark. In 2019, nationally, white families had over seven times as much wealth as Black families, and over five times as much wealth as Hispanic families.

Though certainly not the only factors, homeownership and post-secondary education (via its connection to higher paying jobs) are recognized contributors to wealth differences across races. The following two graphs show that, prior to the pandemic, Colorado homeownership and post-secondary attainment rates varied significantly by race and ethnicity.

Two patterns are evident in the charts above. First, homeownership rates, generally, were fairly constant for the 30 years prior to the pandemic. Concerningly, this stability meant that historic gaps in homeownership between white and BIPOC Coloradans remained largely unchanged over the years. Second, pre-COVID, there was an upward trend for all Coloradans in post-secondary credentialing. However, sizable education attainment gaps persisted, particularly between white and Hispanic Coloradans.

Pandemic Impacts

The COVID pandemic upended life as many of us knew it. In the course of a few short years, everything from how we work and learn to the housing market underwent massive changes. Below, we examine whether the pandemic also had an impact on homeownership and post-secondary education attainment in Colorado.

The above charts show there were some slight changes in homeownership and post-secondary education rates post-COVID. Notably, homeownership rates for Black Coloradans remained stagnant, while Hispanic homeownership rates grew slightly. Additionally, rates of post-secondary education appear to have grown a little faster for Black and white Coloradans than for others. In the coming years, it will be important to continue examining these trends to understand if they reflect long-term changes.

Lessons from the Pandemic

While it does not appear that homeownership or post-secondary education rates changed dramatically as a result of COVID, the pandemic did demonstrate how important both are to building and maintaining wealth.

Homeownership and Wealth-Building

Amongst its many impacts, the COVID pandemic led to a significant increase in home values. According to Zillow, the cost of a typical Colorado home grew by almost 30 percent from January of 2020 to January of 2022. 

Home value growth directly increases homeowner wealth. Notably, COVID-induced home value increases were especially beneficial to Black homeowners. This is because, compared to homeowners of other races and ethnicities, Black homeowners, nationally, saw the largest increase in the value of their homes.

This increase in home values has been cited as a main reason why wealth grew – especially for Black families – during the pandemic.

Higher Education and Financial Security

The pandemic’s differential impact on high vs low-wage workers has been thoroughly documented. At COVID’s onset, front-line retail, service, and hospitality workers were especially impacted by the economic slowdown. Federal aid helped sustain these workers until the economy was righted.

Unfortunately, however, economic stress post-COVID remains a reality for many families. Data shows that debt is rising, as are loan defaults. Most notably, these challenges are disproportionately occurring in households with lower incomes.

Available data does not specifically look at debt by one’s education level. However, the connection between higher education and wages is well-established. The higher someone’s education, generally, the more money they make. As a result, it’s very likely those experiencing the most economic stress, both during and in the years after COVID, are those with lower rates of post-secondary education.

Moving Forward

Taken together, the sections above show:

  • Post-COVID, the racial wealth-gap continues to exist in Colorado. While some of the structural drivers of the gap may have improved over the course of the pandemic, this progress was minimal at best.
  • The wealth-building implications of disparate homeownership and post-secondary education rates. Homeowners benefited tremendously from the robust housing market that accompanied COVID, and those with post-secondary credentials are better weathering current periods of economic stress. That BIPOC Coloradans have lower rates of homeownership and post-secondary education mean that these families are at a wealth-building and maintenance disadvantage compared to white Coloradans.
  • Just as the racial wealth gap is rooted in public policy choices, it can also be closed by intentional, targeted actions.

Notably, there is on-going work to close homeownership and post-secondary attainment gaps in Colorado. For example, there will be some additional financial assistance for first-time homebuyers through Proposition 123, the ballot measure which passed in 2022. The Deerfield Fund for Black Wealth specifically offers Black and African American first-time homebuyers down payment assistance. A recently-passed piece of legislation will support the higher education tuition needs of lower and middle income families. Moreover, Colorado’s Department of Higher Education has created recommendations to specifically address differences in post-secondary attainment rates for BIPOC Coloradans.

However, more work remains. The policies mentioned above, as well as others, can be expanded – and for those that aren’t already, efforts can be better targeted to intentionally close the racial wealth gap. In taking these actions, policymakers can make meaningful inroads to addressing wealth inequality in Colorado.