Post-recession black homeownership lagging
SAN FRANCISCO — The nation’s homeownership rate appears to be stabilizing, but blacks aren’t sharing in the economic recovery, according to a report by Harvard University’s Joint Center for Housing Studies.
The center said the disparity between rates of homeownership for whites and blacks is at its highest in 70-plus years of data. Asians and Hispanics are also seeing gains in homeownership.
Experts say reasons for the lower homeownership rate for blacks range from historic underemployment and low wages to a recession-related foreclosure crisis that hit black communities particularly hard. In 2004, the pinnacle of U.S. homeownership, three-quarters of whites and nearly half of blacks owned homes, according to the Harvard study.
By 2016, blacks’ homeowner rate had fallen to 42.2 percent and lagged 29.7 percentage points behind whites, nearly a percentage point higher than in 2015.
“It has always been historically and systemically harder for blacks, and we were seeing there a little bit of progress, and now we’re back at square one,” said Alanna McCargo, co-director of the Housing Finance Policy Center at the Urban Institute, a think-tank focused on inner-city issues that published a similar report.
An AP analysis of U.S. Census Bureau statistics shows some pockets of the Midwest and California had the lowest homeownership rates for blacks, while some areas of the South had the highest.
Low inventory adds to the problem, said Jeffrey Hicks, incoming president of the National Association of Real Estate Brokers, which was founded in 1947 to promote fair housing opportunities for minorities. The Atlanta area has only about 30,000 properties for sale through real estate agents, compared with approximately 100,000 about 13 years ago, he said.
“You had subdivisions going up everywhere in terms of newer homes,” Hicks said. “We haven’t seen that resurgence of new housing stock.”
Blacks snapped up homes at the peak of the housing bubble, lured by generous lending and a glut of affordable properties, housing experts say.
Graciano de la Cruz, 70, grew up in San Francisco, the child of a Filipino father and a black mother. In the 1960s, the city condemned his mother’s house for redevelopment in the historically black Fillmore neighborhood. She was given a housing voucher and became a renter, losing any equity she could have passed to her children.
He and his wife, Buena, who is Filipino, must now sell their own home of two decades to pay off a debt that stemmed from a “pick-a-payment” loan with World Savings Bank in August 2006.
They asked for a loan with a fixed rate, but the lender said an adjustable rate package would meet their needs. The initial monthly payment for the pick-a-payment loan was about $1,700.
Then her health declined, and he lost his job. In 2014, Wells Fargo, which had purchased World Savings, issued a notice of default. By then, the monthly payments had mushroomed to roughly $3,000.
“I can’t sleep,” de la Cruz said. “I fear I might get a knock on the door, and the banker will come up with sheriff’s agents talking about, ‘You got to leave now.’”
The pick-a-payment loans drew wide government scrutiny. In 2010, Wells Fargo agreed to pay $24 million to end an investigation by eight states, including California, into whether lenders later acquired by the bank made unsustainable mortgages without disclosing the terms.