Shaela Beard
The Economy

Data + Solutions for the K-Shaped Economy

Friday, January 16, 2026
Article

The Inheritance Gap: How 1970s Housing Policy Determines 2025 Wealth

10 minutes read By Shaela Beard

The Inheritance Gap: How 1970s Housing Policy Determines 2025 Wealth

Sandra's grandmother tried to buy a house in 1968. She had steady employment, solid credit, and a 20% down payment saved. The bank said no. The reason, written in internal memos that surfaced decades later: "neighborhood demographic risk."

The house Sandra's grandmother wanted to buy cost $24,000 in 1968. Today, it's worth $380,000. Her grandmother rented until she died in 2015. Sandra inherited nothing.

Michael's grandmother bought a similar house three miles away in 1968 for $26,000. The FHA backed her loan. She paid it off in 1988. She sold it in 2010 for $285,000. She died in 2020. Michael inherited $240,000 after estate costs.

Sandra and Michael are cousins. They work at the same hospital. They earn the same salary. Michael has $240,000 in generational wealth. Sandra has $0.

The difference wasn't income. The difference wasn't work ethic. The difference wasn't savings habits. The difference was a bank policy in 1968 that the Civil Rights Act theoretically outlawed—but that banks practiced anyway using coded language and internal metrics.

That's the inheritance gap.

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In This Article

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The Homeownership Gap Today

Current U.S. homeownership rates (2025):

  • White households: 73.2%
  • Black households: 46.3%
  • Hispanic households: 51.1%
  • Asian households: 63.8%

The gap between white and Black homeownership sits at 26.9 percentage points. That's wider than it was in 1960—before the Fair Housing Act, before the Civil Rights Act, before any of the legislation that promised equal access.

Historical comparison:

| Year | White Homeownership | Black Homeownership | Gap | |------|-------------------|-------------------|-----| | 1960 | 64.4% | 38.4% | 26.0% | | 1970 | 65.4% | 42.0% | 23.4% | | 1990 | 68.2% | 43.4% | 24.8% | | 2004 | 76.1% | 49.1% | 27.0% (peak) | | 2010 | 74.5% | 44.9% | 29.6% (post-crash) | | 2020 | 74.5% | 45.3% | 29.2% | | 2025 | 73.2% | 46.3% | 26.9% |

The gap narrowed slightly during the 2000s housing boom—when predatory lenders targeted Black families with subprime loans. When the market crashed in 2008, those families lost homes at 2-3x the rate of white families. The gap widened again.

We've made almost no progress in 65 years.

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How Redlining Created Permanent Wealth Gaps

Redlining started in the 1930s. The Home Owners' Loan Corporation (HOLC) created maps of American cities. They color-coded neighborhoods:

  • Green: "Best" - low risk for lending
  • Blue: "Still desirable"
  • Yellow: "Definitely declining"
  • Red: "Hazardous"

Any neighborhood with Black residents got marked red—regardless of income, property condition, or default rates. Banks used the maps to deny mortgages. The FHA refused to back loans in red zones. Entire generations of Black families were locked out of homeownership.

The math of exclusion:

Let's trace two families from 1968 to 2025:

The Johnsons (white family):

  • 1968: Bought house for $26,000 with FHA loan
  • 1988: Paid off mortgage
  • 2000: House worth $180,000
  • 2010: House worth $285,000
  • 2020: Homeowner dies, daughter inherits house
  • 2025: Daughter sells for $380,000
  • Generational wealth transferred: $380,000

The Washingtons (Black family):

  • 1968: Denied mortgage due to "neighborhood risk factors"
  • 1968-2025: Rent continuously
  • Total rent paid over 57 years: ~$540,000 (adjusted for increases)
  • 2020: Family member dies
  • 2025: Estate value: $12,000 in savings minus $18,000 in medical debt
  • Generational wealth transferred: -$6,000

The Johnsons built $380,000 in wealth by owning an asset that appreciated. The Washingtons spent $540,000 on housing and ended with nothing. The difference was a bank decision in 1968.

This pattern repeated across millions of families. The cumulative effect created the racial wealth gap we see today.

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Inheritance Expectations vs. Reality

The Urban Institute analyzed Federal Reserve data on inheritance expectations. They asked younger adults (under age 58) whether they expect to receive an inheritance and how much.

Inheritance expectations by race (median expected amount):

| Race | % Expecting Inheritance | Median Expected Amount | |------|------------------------|----------------------| | White renters | 52% | $200,000 | | Black renters | 29% | $48,000 | | White homeowners | 68% | $295,000 | | Black homeowners | 47% | $135,000 |

Even among homeowners, Black families expect 54% less inheritance than white families. Among renters, Black families expect 76% less.

Reality check:

Median household wealth by race (2022 Federal Reserve data):

  • White households: $285,000
  • Black households: $44,900

The median Black household has 84% less wealth than the median white household. You can't inherit what your parents don't have.

The expectation mismatch:

A 2024 USA Today survey found that 80% of younger adults expect to receive more than $100,000 in inheritance. The average expectation sits at $320,000.

The problem: median household wealth in the United States is $192,900. Half of households have less than that. One in six households has negative net worth—more debt than assets.

Someone expecting $300,000 from parents with $40,000 in net worth is setting themselves up for disappointment. But the expectation shapes financial planning. People assume they'll get a windfall. They underfund retirement. They carry debt longer. They make decisions based on money that doesn't exist.

When the parents die and the inheritance never materializes—or arrives as $15,000 instead of $300,000—those financial plans collapse.

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The Compounding Effect

The inheritance gap doesn't just affect one generation. It compounds across multiple generations.

Generation 1 (Grandparents born 1930-1945):

  • White family buys home in 1960 for $15,000
  • Black family denied mortgage, continues renting
  • By 2000: White family has $150,000 in home equity, Black family has $0

Generation 2 (Parents born 1960-1975):

  • White adult receives $150,000 inheritance in 2000
  • Uses $50,000 as down payment on $200,000 home
  • Black adult receives no inheritance
  • Rents until age 42, finally saves enough to buy $180,000 home in 2015

Generation 3 (Adults born 1985-2000):

  • White adult receives help with college (parents used home equity line)
  • Receives $80,000 gift for down payment at age 30 in 2025
  • Buys $400,000 home with 20% down
  • Black adult receives no help with college (parents still paying mortgage)
  • Rents until they can save a down payment
  • Still renting at age 35 in 2025

By Generation 3, the white family has $400,000+ in real estate equity plus paid-off education. The Black family has student debt and no home equity.

The gap started with a denied mortgage in 1960. By 2025, it's a $400,000+ wealth gap across three generations.

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Why the Gap Keeps Widening

The Great Wealth Transfer—$124 trillion moving from Baby Boomers to younger generations between now and 2048—will make the racial wealth gap worse, not better.

Urban Institute projections:

If current trends continue, the Great Wealth Transfer will affect homeownership rates over the next 25 years:

  • White homeownership rate increase: +7.7 percentage points
  • Black homeownership rate increase: +3.4 percentage points

The gap widens by 4.3 percentage points. Inheritance makes inequality worse.

Why:

  1. Who inherits property: 83% of white Americans over age 58 own homes. Only 59% of Black Americans over 58 own homes. You can't inherit property your parents never owned.
  1. Home values: Black-owned homes are valued 23% lower than comparable white-owned homes in similar neighborhoods (Brookings Institution research). Even when Black families own property, it appreciates less.
  1. Early money advantages: Wealthy families don't wait for someone to die. They gift $18,000 per person per year tax-free. Over 10 years, parents can transfer $360,000 to a married couple without triggering gift tax. Black families have less wealth to gift.
  1. Compounding appreciation: A $100,000 inheritance received at age 30 and invested in a home grows to $300,000 by age 60 through appreciation and mortgage paydown. A $100,000 inheritance received at age 50 grows to $140,000 by age 60. Early money compounds. Black families receive inheritances later in life—if at all.

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What the Data Shows

Home equity as percentage of total wealth:

  • Black families: 53%
  • White families: 39%

Black families depend more heavily on homeownership for wealth building. They also have less access to it. When they do achieve homeownership, the home represents a larger share of total wealth—making them more vulnerable to housing market crashes.

Homeownership by income level (Federal Reserve data):

| Income Level | White Homeownership | Black Homeownership | Gap | |--------------|-------------------|-------------------|-----| | Under $50K | 45% | 28% | 17% | | $50K-$100K | 71% | 48% | 23% | | Over $100K | 89% | 72% | 17% |

Even at identical income levels, Black families have significantly lower homeownership rates. Income alone doesn't close the gap. Generational wealth does.

First-time homebuyer age:

  • White first-time buyers: median age 33
  • Black first-time buyers: median age 38

Black families buy their first home 5 years later than white families. That's 5 years of lost appreciation, 5 years of paying rent instead of building equity, and 5 fewer years of homeownership before passing wealth to the next generation.

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The $124 Trillion That Skips Millions

Between now and 2048, $124 trillion will transfer from Baby Boomers and the Silent Generation to younger Americans. Cerulli Associates tracks these projections. The number keeps climbing.

Who gets it:

The top 10% of families will transfer $35.8 trillion among themselves—42% of the total transfer. The wealthiest families pass down:

  • Homes worth $800,000+
  • Stock portfolios worth $2 million+
  • Business equity worth $500,000+

Middle-class white families pass down:

  • Homes worth $300,000-$500,000
  • Retirement accounts worth $150,000-$400,000
  • Some savings and vehicles

Lower-income white families pass down:

  • Homes worth $150,000-$250,000
  • Smaller retirement accounts
  • Vehicles and personal property

Black families disproportionately pass down:

  • Medical debt
  • Funeral expenses
  • Modest savings if anything

The inheritance lottery:

Whether you're born into a family with generational wealth increasingly determines your economic outcomes more than your education, your work ethic, or your income.

Two people with identical jobs, identical salaries, and identical spending habits will have radically different wealth trajectories if one receives $200,000 in their 30s and the other receives nothing.

The first person buys a home at 32. By 52, they have $400,000 in home equity. The second person rents until 44. By 52, they have $80,000 in home equity. The $200,000 inheritance became a $320,000 wealth gap in 20 years—through no difference in effort or ability.

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What Changes It

The racial wealth gap exists because of policy decisions: redlining, discriminatory lending, exclusionary zoning, highway placement through Black neighborhoods, urban renewal that destroyed Black-owned property, and predatory lending that targeted Black families with subprime loans.

Policy created it. Policy can address it.

What the data says works:

  1. Down payment assistance programs targeted at first-time buyers in historically excluded communities
  2. Enforcement of fair lending laws with actual penalties for discriminatory practices
  3. Property tax relief for first-generation homeowners in appreciating markets
  4. Community land trusts that separate land ownership from home ownership to preserve affordability
  5. Inclusive zoning that allows multifamily housing in high-opportunity neighborhoods

The Great Wealth Transfer is happening whether we address the gap or not. $124 trillion will move from old to young. The question is whether it compounds existing inequality or begins to close gaps created by decades of discriminatory policy.

Sandra and Michael earn the same salary. They're the same age. They have the same education. Michael has $240,000 in generational wealth. Sandra has $0.

That's not a personal failure. That's a policy outcome.

And it's repeating across millions of families right now.

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Data Sources

All statistics from:

  • U.S. Census Bureau, Housing Vacancy Survey (Q3 2025)
  • Federal Reserve, Survey of Consumer Finances (2022)
  • Urban Institute, "Why the Great Wealth Transfer may widen U.S. racial homeownership gap" (June 2024)
  • Cerulli Associates, "The Cerulli Report: U.S. High-Net-Worth and Ultra-High-Net-Worth Markets 2024"
  • Brookings Institution, "The devaluation of assets in Black neighborhoods"
  • Institute on Assets and Social Policy, racial wealth gap research
  • National Association of Real Estate Brokers, homeownership data by race

For detailed wealth transfer data: Great Wealth Transfer Analysis

For housing access data: Housing Investment Access Data

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Analysis by Shaela Beard | Follow @shaelabeard on TikTok