This story is the second in a regular series that examines the challenges Americans face as they try to buy starter homes.

At age 60, Sonia McGhee still dreams of becoming a homeowner.

Not having been able to buy a home earlier has cost her a lot.

“You have nothing to leave behind for your family. There was no place where I could go and mark my kids’ heights. I couldn’t do that because it was not my house,” she says. “So it's like, you can't create memories and be able to go back and say, 'oh, this is our childhood home.'”

McGhee, who is Black and works as a director of gift stores at the Intrepid Museum in New York City, says for much of her married life she and her husband (from whom she’s now separated) made too little to qualify for bank loans.

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“We could barely make our rent payments,” says McGhee, who lives in Nanuet, New York. “Being Black and a female, you don't get the better-paying jobs. If you get a job, they don't pay you as well as they pay other people. It's really hard to try and overcome the obstacles when you feel like you're constantly being pushed down.”

Over the pandemic, she, like many of her colleagues, had to take a 30% pay cut.

Gap in homeownership worsens

The gap in the homeownership rate between Black and white families in the U.S. is bigger today than when it was legal to discriminate based on race, according to a study by the Urban Institute.

In 1960, eight years before the Fair Housing Act, which prohibits property owners, financial institutions and landlords from discriminating on the basis of race, a gap of 27 percentage points existed between white rates of homeownership (65%) and Black rates of homeownership (38%), and that gulf has widened in recent years. In 2018, 72% of white households owned a home while Black homeownership stood at 42%, a difference of 30 percentage point. In 2018, 57% of Asian and 47.5% of Hispanic American households were homeowners.

Since 2001, the Black homeownership rate has seen the most dramatic drop of any racial or ethnic group in the U.S., falling 5% compared with a 1% decline for white families and increases for Hispanic and Asian Americans.

During the housing boom of the early 2000s, Black Americans between ages 45 and 75 disproportionately held subprime mortgages, loans offered at higher interest rates to borrowers characterized as having tarnished credit histories. Many of these mortgage holders lost their homes and have been unable to return to homeownership, says Jun Zhu, a senior research associate with the Housing Finance Policy Center at the Urban Institute.

Benefits of owning a home

Black homeownership, which peaked in 2004 at 49% before the 2008 housing crisis, is projected to fall to 41% in 2040, according to data shared by Urban Institute, the Washington D.C.-based think tank, with USA TODAY. And that trend is significant because economists believe homeownership is an effective way to build wealth, especially for low-income households.

Decadeslong housing segregation, a systemic denial of loans or insurance in predominantly minority areas, a persistent income gap, and a historically limited ability of Black parents to leave their families an inheritance have contributed to the nation's financial disparity, experts say.

And these trends will affect retirement prospects for Black Americans and their ability to pass down wealth to the next generation, Zhu says.

"So it's not just one generation's issue, it becomes an intergeneration issue," says Zhu.

Generational wealth is not part of the Black "lifestyle," says McGhee of Nanuet, New York.

“It's a vicious cycle. My parents didn’t own a home when I was growing up,” says McGhee, who was raised in Virginia and North Carolina. “If I could have bought a house when I was 35, it would be paid for by now. I would have something to pass down to my kids.”

The pandemic housing market of the past two years, which pushed prices to record highs amid record-low supplies of homes, has been hard for people looking for affordable homes. But it has been particularly difficult for Black Americans, according to a new analysis from the National Association of Realtors.

Who can afford a home

More than half of all U.S. homes listed for sale are affordable for households with income of at least $100,000. But nationwide, 35% of white households and only 20% of Black households have incomes greater than $100,000.

“The homeownership rate has been around 50% for all households in the expensive metro markets, such as Los Angeles and San Francisco, and therefore it’s becoming nearly impossible to afford a home, especially for Black households,” says Lawrence Yun, chief economist at NAR.

Some metro areas still remain affordable for Black households in proportion to their income. Cities such as Akron, Dayton, Toledo and Youngstown, Ohio; Baltimore, Maryland; Birmingham, Alabama; Detroit; McAllen, Texas; Memphis, Tennessee; and St. Louis, according to the NAR study.

Pamela Brooks, an evidence technician with the City of Richmond Police Department, has been looking for a home for the past year. The 42-year-old single mother of three boys grew up in public housing and has never owned a home.

She makes $44,000 a year and has been preapproved for a Federal Housing Authority issued loan of $250,000. She spent the past year building her credit and taking courses geared towards first-time buyers.

When she talks to her white colleagues, she says she feels they are much more knowledgeable about homeownership.

“I guess it's something that their families teach them from generation to generation,” she says. “As far as homeownership, that's not taught in my community.”

How to close the homeownership gap

Financial education and access to credit are important steps towards closing the homeownership gap, Zhu says.

“The visibility of the down payment assistance programs and an understanding of what types of programs exist is pretty low in the Black community,” she says. “We should also reexamine how we can qualify more people to borrow and how we measure creditworthiness.”

For example, if someone does not have a long credit history, then incorporating their rental payments history might be a solution, she says.

Brooks is currently enrolled in an FHA program that does not require a down payment but has been saving up for closing costs for when she does find a home.

In December 2021, Richmond-area home prices were up 9% compared with the previous year, selling for a median price of $300,000. More than half the homes in the market sold for above asking price, says Kalyani Dere, a Redfin agent who has been working with Brooks.

“A lot of times, I can't even show the houses in Pamela’s price range,” she says. “They are under contract before I can take her.”

Dere also has seen an influx of people moving from pricey northern Virginia suburbs looking for more affordable options.

“But it not just northern Virginia, people have been coming from Boston and California because so many people now have the option to work remotely,” she says. “They want to be able to save money and get more for their buck.”

Having done her homework, Brooks says she’s optimistic about finding her dream house.

“I want to buy a single-family house with a backyard where my boys can play,” she says. “My rent keeps going up every year and I'll never own this. I want to be able to leave something to my children.”

FHA home loans draw scrutiny

Claudia Barnes, a real estate broker in Plainview, New York, who has been helping McGhee, says an offer she recently made on a condominium in New City fell through.

“They initially accepted the offer, but then came back to us saying the condo was not FHA-approved,” she says.

Some condo associations stay away from being approved for FHA loans as the lenient lending process and minimal down payment requirements make other condo owners wary that FHA homebuyers will not be able to afford the upkeep and potential special assessments that may crop up, says Carla Ayers, a realtor in southeastern Michigan who also serves on a condo board.

“I live in a very affluent condo neighborhood,” Ayers says. “And it's been brought up several times in meetings that people should be very careful who they sell their homes to because FHA means that they don't have the 20% down, so they don't care about their property near as much.”

McGhee says it’s more than the financial component.

“I think it’s by design,” McGhee says. “Because it is mostly people of color who apply for FHA loans.”

Given that she’s 60, how long does she expect to work to pay off her mortgage?

“Probably, forever. I can't stop,” she says. “I mean, I really want something of my own because I want to be able to paint it whatever color I want. Or have a dog, as a companion, someone to live with me in my old years.”

Swapna Venugopal Ramaswamy is the housing and economy reporter for USA TODAY. Follow her on Twitter @SwapnaVenugopal

This article originally appeared on USA TODAY: Why Black home ownership gap is growing – and will continue to do so