LGBT Americans in the Deep South face Disparities in Housing
June 20th, 2024
By Courtney Thomas, Senior Policy Analyst
More than 1/3rd of LGBT Americans live in the South.[1] In a region plagued by social and economic inequality, unequal banking access, and persistent poverty, discrimination against sexual orientation is yet another barrier to achieving financial stability. Compared to non-LGBT persons, LGBT individuals face higher rates of poverty, lower rates of homeownership, and higher rates of homelessness.[2] According to the Federal Reserve, 22% of LGBT adults had household incomes less than $25,000 versus 14% of non-LGBT households.[3] Access to homeownership remains a significant driver of wealth and economic opportunity for all Americans; however widespread disparities exist for LGBT individuals to unlock the American dream.
LGBT homeownership rates lag behind the general population. According to a research survey by Freddie Mac, 49% of LGBT households ages 22-72 are likely to own a home, nearly 20 points lower than the national homeownership rate of 66%.[4] Further disparities exist by race. The same survey found that only 30% of Black LGBT households are homeowners as compared to 58% of white LGBT households.[5]
Saving for a downpayment and qualifying for a mortgage are two major challenges on the path to homeownership.[6] These obstacles are compounded by sexual orientation, geographic location, and race. The Census Bureau finds that LGBT adults were more likely to experience food insecurity and have difficulty paying for usual household expenses as compared to non-LGBT adults during the pandemic.[7] For LGBT households in the Deep South, financial instability is likely more acute. Data from Prosperity Now shows that 37% of households, on average, in the Deep South do not have at least three months of savings to cover their expenses in case of job loss or medical emergency – 10 percentage points higher than the national average.[8] The liquid asset poverty rate increases for Black households (54%) and Hispanic households (56%) while White households are just above the national average (28%).[9] Without the capacity to cover basic living expenses, saving for a downpayment becomes nearly impossible.
In addition to downpayment challenges, LGBT Americans face barriers to securing a mortgage. The U.S. Bank reports that 52% of LGBTQ+ respondents experienced difficulty acquiring a mortgage as compared to 38% of non-LGBTQ+, despite LGBTQ+ respondents having higher credit scores among those surveyed.[10] Furthermore, the National Community Reinvestment Coalition (NCRC) reports that same-sex couples pay more in interest rates and closing costs than different-sex- couples.[11] Transgender individuals are even more likely to face discrimination in the mortgage lending process. According to the National Center for Gender Inequality, 1 in 5 transgender individuals reported that they were discriminated against when seeking a home.[12]
Mortgage accessibility challenges, like downpayment assistance, is compounded by geography. The Consumer Financial Protection Bureau’s (CFPB) report on Banking and Credit Access in the Southern region outlined disparities across the mortgage application process. The report indicates that mortgage applications in the Southern region have higher denial rates and loans have higher interest rates than the national average.[13]Furthermore, borrowers of color, rural borrowers, and low-income borrowers receive a lower share of mortgage loans than other populations in the region. Top of FormBottom of Form
Despite the data available, more data is needed to understand how intersecting identities and regional differences impact mortgage lending. These observed disparities underscore the importance of financial institutions offering inclusive and supportive financial products that meet the complex needs of LGBT Americans. There are several recommendations that policymakers can implement to build wealth for LGBT Americans—especially those in the Deep South.
Advocate for Federal LGBT Protections
While protections exist for LGBT Americans through the Fair Housing Act and Equal Credit Opportunity Act, there is no official federal legislation that prevents discrimination in lending, housing, or employment based on sexual orientation and gender identity. The Home Mortgage Disclosure Act (HMDA), which requires financial institutions to report their mortgage lending data, does not collect information related to a borrower’s sexual orientation. Moreover, only 28 states and the District of Columbia cover both sexual orientation and gender identity in their discrimination laws — none of which are located in the Deep South.[14] The National Association of Gay and Lesbian Realtors reports that 46% of LGBT Americans fear discrimination in their homebuying process.[15] Strong federal protections would ensure that LGBT Americans are not susceptible to discriminatory lending and send a clear message that all people regardless of their identity have equal access to opportunity in this country.
Support Downpayment Assistance Programs
Financing a home has become more expensive as interest rates and housing prices have increased. Saving for a downpayment is a considerable barrier to homeownership, particularly among LGBT adults. A survey from the National Association of Gay and Lesbian Real Estate Professionals found that 77% of their members lacked sufficient money for a downpayment and 50% of renters did not have enough savings for a downpayment.[16] Policy-makers should prioritize allocating resources for downpayment assistance programs to assist borrowers with these upfront costs. Downpayment assistance can bridge the gap for between renting and homeownership by reducing the upfront costs for many LGBT households that aspire to own a home.
The credit union movement began as a people-centered movement intended to address communities overlooked by larger financial institutions. The LGBT community represents a diverse group of people from various ages, races, and geographic backgrounds—each with unique experiences and perspectives. Financial institutions should partner with organizations that are skilled at engaging LGBT communities. For example, organizations, like CU Pride, an association of credit unions and professionals, focus on driving vulnerable collaboration around the critical issues impacting the credit union LGBTQ+ community and the members they serve. By working together with experts in the field, financial institutions can design products and services to cater to the unique needs of the LGBT community.
[1] Hasenbush, A., Flores, A., Kastanis, A., Sears, B., & Gates, G. (2014). The LGBT divide: A data portrait of LGBT people in the Midwestern, mountain & southern states.; LGBT represents individuals who identify as lesbian, bisexual, or trans. In other places in the blog, LGBQ+ is used. This definition is more encompassing including individuals who identify as queer or any additional identity such as pansexual, nonbinary, asexual, etc.
[2] The Williams Institute at UCLA School of Law. (2021). LGBT People and Housing Affordability, Discrimination, and Homelessness – Williams Institute. Williams Institute. https://williamsinstitute.law.ucla.edu/publications/lgbt-housing-instability/
[3] Scott Sophia, Ana Kent, (2022) New Analysis Finds LGBTQ+ Households Trail in Income and Wealth https://www.stlouisfed.org/en/on-the-economy/2022/dec/new-analysis-finds-lgbtq-households-trail-income-wealth
[4] LGBT Homeownership Rates Lag General Population (2018) Freddie Mac. https://www.freddiemac.com/research/consumer-research/20181001-lgbt-homeownership
[5] Ibid.
[6] Goodman, L., McCargo, A., Golding, E., Bai, B., Strochak, S., & Urban Institute. (2018). Barriers to accessing homeownership. In Urban Institute.
[7] U.S. Census Bureau. (2024). Household Pulse survey shows LGBT adults more likely to report living in households with food and economic insecurity than Non-LGBT respondents. Census.gov. https://www.census.gov/library/stories/2021/08/lgbt-community-harder-hit-by-economic-impact-of-pandemic.html
[8] Prosperity Now Scorecard. (2021). “Liquid Asset Poverty Rate”. https://scorecard.prosperitynow.org/data-by-issue#finance/outcome/liquid-asset-poverty-rate
[9] Ibid.
[10] The LGBTQI+ Financial Landscape (2022) US Bank
https://www.usbank.com/dam/images/lgbt/LGBTQ-Financial-Landscape-Whitepaper.pdf
[11] Kali, J. R. a. K. S. (2022). “Same-Sex Couples and Mortgage Lending National Community Reinvestment Act”
https://ncrc.org/same-sex-couples-and-mortgage-lending
[12] Housing & Homelessness. (2021, April 22). National Center for Transgender Equality. https://transequality.org/issues/housing-homelessness
[13] Consumer Financial Protection Bureau (2023). “Banking and Credit Access in the Southern Region of the U.S.”. https://www.consumerfinance.gov/data-research/research-reports/banking-and-credit-access-in-the-southern-region-of-the-us
[14] US Advancement Project . (2023).“Democracy Ratings by State”. https://www.lgbtmap.org/equality-maps/
[15] Berger, J.(2023). “NAGLREP LGBTQ Real Estate Report”. NAGLREP.https://naglrep.com/blog/2023/05/26/2023-lgbtq-real-estate-report
[16] Ibid.
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