Homeownership has long been the primary key to wealth building in the United States. The relative accessibility of long-term mortgages allows buyers to pay for valuable assets over the course of decades. But in what has become a vicious cycle for tenants, many can’t save for a down payment on a house because of soaring rent prices, and yet they can’t build wealth through home equity because their housing expenses are effectively money they will not get back. In fact, more than 60 percent of renters here don’t have the money for even the upfront costs to move into a new apartment, let alone a down payment on a house.
The result is a gap that shows the median net wealth for homeowners in Massachusetts is $790,500, and just $1,500 for renters, the study found.
Black and Hispanic families own their homes at far lower rates than white families in this state, which helps partly explain the wealth gap. Some 70 percent of white households here own their homes, according to US Census data, compared with 39 percent of Black households and 32 percent of Latino households.
The median net family wealth across racial groups is similarly disproportionate. Latino families and Black families in Massachusetts have a median net wealth of just $1,200 and $7,800, respectively, the new Fed report found, while white families have a median net wealth of $549,200.
Those disparities are closely tied to the racist lending policies that were prevalent in Massachusetts decades ago, said Tom Callahan, executive director of the Partnership for Financial Equity. Policies like redlining, the practice by which banks refused to issue home loans in neighborhoods with large minority populations, meant that Black and Hispanic families were largely excluded from the post-World War II boom in homeownership. That same boom vaulted many working-class white families into the middle class.
“There is a direct relationship between the racial homeownership gaps we have today and the decades of racist housing policies that prevented households of color from purchasing homes,” said Callahan.
Of course, there is more behind the wealth gap than disparate homeownership rates. Policies like redlining also had broader effects, such as creating neighborhoods segregated by income and unequal access to strong public education systems. These can compound to create a lack of opportunities for higher-paying jobs that, along with discrimination in hiring, has long made it more difficult for residents of color to move up the economic ladder.
But Black and Hispanic families largely missed out on the homebuying boom that secured generational wealth for many white residents and “have been trying to catch up ever since,” said Crawford.
Indeed, roughly 40 percent of renter families in Massachusetts held zero or negative net wealth, according to the study, compared to just 1 percent of homeowning families. And some 60 percent of renter households could not afford to pay for a $400 emergency expense with cash or a cash equivalent, the Fed study found, compared with just 20 percent of homeowners.
It is easy to understand why.
Lashaunda Watson, a mother of four, learned from a young age how disproportionately wealth is distributed in this state during her time as a METCO student in Braintree. There, she said, she saw how children born into wealthier families lived.
These days, Watson makes $63,000 a year as a financial coach. But between her $3,179 rent in Randolph, her daughter’s college tuition payments, and her student loan and credit card debt, she still finds herself grinding to make ends meet. The prospect of buying a home feels far away.
“For so many of us, we feel like we are working just to pay bills,” said Watson, who is 45. “Where is the pursuit of happiness that we were promised?”
The Fed’s 2015 report sharpened the focus of many political leaders on the racial wealth gap, spurring numerous new policy efforts, lending programs, and studies.
But for all of those efforts, home prices here have exploded over that same period, perhaps offsetting any meaningful gains. In June 2016, the median-priced single-family home in Massachusetts sold for $380,000, according to the Massachusetts Association of Realtors. In June 2026, that figure was $715,000, an 88 percent jump.
Among the many effects from that huge increase in price are two salient facts, according to Crawford: For one, it has grown the wealth of existing homeowners, who are mostly white. Among homeowners in this state, the median home equity was about $415,000, the report found, making it by far the biggest contributor to a person’s overall wealth.
And the rise in home prices has also increased the amount of money a household needs to earn to purchase a home significantly, which has disproportionately affected Black and Hispanic families.
“You have a generation of Black and Hispanic families whose parents were not able to purchase homes and build wealth,” Crawford said. “When one generation is locked out, their children start further behind.”
The state, municipalities, and nonprofits have poured tens of millions of dollars into programs that provide down payment assistance or buy down mortgage rates for first-time homebuyers, a key strategy for closing the racial wealth gap, Crawford said.
And those programs have been effective, if limited. The Partnership for Financial Equity found that the share of mortgages issued to Black and Latino homebuyers in 2022 was roughly equal to their respective shares of the population, a signal of progress.
But the more home prices rise, the more money is needed to facilitate a single purchase, meaning homebuyer assistance programs can only be so effective at their current funding levels.
There was a brief period during the pandemic when the state dedicated federal emergency funds to those programs, which ultimately facilitated an uptick in first-time homebuyers. But that additional funding has since dried up. A serious effort to address the racial wealth gap would involved beefing up those programs, Crawford said, creating more first-time homebuyers, rather than focusing singularly on boosting access to rental housing, which she said risks creating “a generation of renters with no equity in a home.”
Another key strategy, said Rachel Heller, executive director of the Massachusetts Housing Partnership, is filling the state’s massive shortage of homes.
Massachusetts’ housing shortage is responsible for driving house prices and rents sky high. It also creates immense competition for the few homes that do come on the market, which makes purchasing a house even more difficult.
“The severe shortage of homes in Massachusetts has had the effect of driving rents and house prices to astronomical levels,” which perpetuates inequalities, Heller said.
Of course, the racial wealth gap is not simply about homeownership. Improving community access to good jobs, health care, and education can also help build wealth. But solving the problem will ultimately require years of dedicated investment aimed at “making homeownership accessible to the people whose families were denied it,” said Crawford.
“I am hoping that at some point, we’ll understand that if we don’t start investing in legitimately fixing this problem, we’re going to have an economy that can’t sustain low or moderate income individuals,” she said. “That’s where we’re heading, or where we already are.”
Katie Johnston of the Globe staff contributed to this report.
Andrew Brinker can be reached at andrew.brinker@globe.com. Follow him @andrewnbrinker.
