Historical barriers and structural inequalities still explain the gap between blacks and whites in homeownership
“Statistics can often be ignored or filed. However, when the story is told through the eyes of young black Americans facing the difficulties of trying to buy a home for a growing family, you clearly see that structural remedies and institutions are needed, “said Donnell Williams, President of the National Association of Real Estate Brokers. “This year’s SHIBA report exposes the difficulties.”
A sample of the main findings of the SHIBA report, mainly written by Vanessa Gail Perry, MBA, Ph.D., professor of marketing, strategic management and public policy, George Washington University School of Business. understand:
- The black population in the United States is concentrated in large cities. Sixty-two percent of blacks are concentrated in 20 MSA. In 2019, 25.6% of the black population resided in areas with a higher median home price than the United States – $ 253,000.
- The homeownership rate for blacks who have graduated from college is only 3.2 percentage points higher than that for white high school dropouts.
- Black homeowners are less likely to have a college degree.
- Blacks have a higher proportion of owner households headed by women than any other category of owner households.
- Black borrowers pay significantly higher rates for FHA guaranteed loans and higher rates for conventional mortgages.
- In 2018, 53% of black mortgage borrowers got FHA or VA loans, compared to 23% of white borrowers.
- Only 5% of the conventional market were loans to black borrowers, compared to 15% of the FHA / VA market.
- In 2019, 10 lenders were responsible for granting 24% of mortgages to black borrowers. Of these 10, only 3 were traditional custodian banks.
- Black applicants are more than twice as likely to have their loan application rejected.
“These disparities persist because of systemic racism and the disadvantages that have built up over time. At the same time, the industry has failed to recognize the opportunities presented by this market segment, ”said Dr Perry.
Much of the wealth gap among black Americans is based on the pervasive institutional barriers that black Americans face at every stage of the home buying process. While the US Census Bureau’s second-quarter 2020 second-quarter 2020 homeownership rate for blacks is a 16-year high, the rate lags more than 26 percentage points behind the rate. 76% non-Hispanic whites for the same period.
The SHIBA report also includes recommendations designed to support the growth of opportunities for black Americans to buy homes and maintain homes if they already own them. Here are some key recommendations:
- Institute aggressive loan forbearance and credit reporting mandates to protect black homeowners and potential buyers from the financial devastation of the COVID-19 pandemic.
- Continue the CARES Act suspension of federal student loan payments, debt collection, and zero interest provisions until the end of the pandemic crisis.
- Restore regulatory protections for fair housing formalizing the disparate impact standard of the Fair Housing Act.
- Reform the HUD 203k program.
- Require that opportunity zone funds be directed to long-term residents versus investors.
- Establish a Renaissance neighborhood program to strengthen home ownership by blacks in historically demarcated neighborhoods and transform communities.
- Increase FHA loans and other down payment assistance programs in areas with low black home ownership rates.
- Change the treatment of student loans in the Debt-to-Income (DTI) formula to include only the payment amount reported.
- At the state level, assess inclusionary zoning programs and their effects on black communities.
“There are solutions. There are remedies in the public and private sectors,” Williams said. “NAREB continues to advocate and push the boundaries by educating all sectors that homeownership not only increases the wealth creation capacity of black Americans, but also serves to strengthen the economic prospects of the country and the communities. ”
These and other findings from the SHIBA report were discussed today at NAREB 2sd Annual National Conversation on Homeownership Among Blacks. Speakers focused on similar themes that called on the federal government for its long-term intentional complicity in promoting a race-based public policy that runs counter to the growth of homeownership. among blacks. This sentiment can be summed up in the remarks given by Rev. Dr. Frédéric D. Haynes, III, Senior Pastor of the West Friendship Baptist Church in Dallas, Texas when he said, “Public policy has paved the way for racial disparity.” Marc Morial, president of the National Urban League, said black Americans must be equally intentional in reclaiming our “piece of dirt” which has been denied to black Americans since the Reconstruction era.
Other panelists addressed their remarks to millennials and GenX-er audience members and discussed the importance of understanding credit much earlier in their lives and how good or bad credit affects their lives. ability to buy a house. Will Roundtree, founder of Las Vegas, NevadaWE management said “credit will become the new dollar”. Former NFL player Ray crockett urged the public to “buy the house before the car … get your credit … and understand what you value.” »Spokesperson for Rental Kharma, Lynne poole noted that black tenants with ‘thin’ credit profiles should use non-traditional digital platforms like Rental Kharma that report rental payments, which are typically not factored into the development of a credit score favorable.
Joanne williams ▪ [email protected] ▪ 202.364.0024
Jill harrison ▪ [email protected] ▪ 770.896.8723
SOURCE National Association of Real Estate Brokers (NAREB)