USA TODAY International Edition
Minority homebuyers face hurdles
Data: Ownership rates for blacks, Hispanics far below that of whites
Darlene Easley doubted she could ever buy another home.
In 2014, the 53-year-old African-American social worker lost her previous house to foreclosure after she went bankrupt over $245,000 in medical bills from her breast cancer treatment.
“I tried to hold onto the home, the car, but the bills kept piling up,” said Easley, who also was raising her teenage daughter on her own at the time. “I was paying what I could, but everything spiraled out of control.”
Fast forward to August 2017, when Easley closed on a three-bedroom ranch home in Canal Winchester, Ohio. Easley got on a budget, paid down debt, improved her credit score and compromised on location.
Easley’s challenges echo what many minorities face as they chase the American Dream of owning a home. This year was no exception, according to a survey from the National Association of Realtors.
All homebuyers faced a challenging housing market as prices and interest rates rose and affordability declined. But larger shares of black and Hispanic buyers had to surmount other obstacles – such as lower incomes, more student debt and mortgage approval troubles – beyond what their white counterparts faced, according to NAR data.
The result? Homeownership rates of black and Hispanic buyers remain far below that of non-Hispanic whites, with black homeownership suffering the most since the Great Recession.
The homeownership rate for whites is 72.9 percent, or 2.7 percent below the rate when the Great Recession began in December 2007. The Hispanic rate is 48.5 percent, or 3.9 percent lower. The black homeownership rate is 47.7 percent, or 12.8 percent off.
What are the obstacles?
The disparity in the homeownership rates has been a longstanding problem, advocates said. “What we see today is the result of historical policies over the past several decades,” from redlining to the foreclosure crisis that disproportionately hit minorities due to predatory lending, said Jhumpa Bhattacharya, vice president of programs and strategy at Insight Center for Community Economic Development, a national research and economic justice organization in Oakland, California.
Income: The median income of black homebuyers was $82,140, or 10.5 percent lower than the median for white buyers at $91,820. The difference can make it harder to save for a down payment. For instance, Easley’s annual salary was $51,000, and she relied on a down payment gift from her twin sister.
Hispanic buyers fared a bit better with incomes 4.5 percent lower than white buyers, according to the NAR. To compensate, these minorities bought lower-priced homes. Part of the income discrepancy is because black and Hispanic buyers are more likely to be firsttimer buyers, a group with statistically lower incomes, versus white homebuyers. But that alone misses a larger context. Minority buyers, especially blacks, were also hit harder by the Great Recession, hurting their earning power going forward.
Student debt: Paying college loans is a big burden for homebuyers. It’s harder to save for a down payment and can make qualifying for a mortgage more difficult. It can also delay a purchase as people pay down their debt.
Forty-three percent of black homebuyers had student debt, compared with only 25 percent for Hispanics and 23 percent for whites, according to the NAR.
Possible solutions
To increase homeownership rates among minorities requires a multiprong strategy.
Bigger picture for credit: Lenders can also adopt alternative methods of evaluating creditworthiness besides just credit scores, to expand access to mortgages.
Grant programs: There can also be better education about down payment assistance or grant programs that states, municipalities and nonprofits offer first-time homebuyers.