In the 2020 edition of its State of Housing in Black America (SHIBA) report, the National Association of Real Estate Brokers, Inc. found that without major changes in public policy especially during the pandemic, Black homeownership will continue to lag, resulting in wealth building being delayed or simply out of reach.

The group says stark outcomes also apply to current Black homeowners who may face the threat of foreclosure as local and federal moratoriums put in place as a response to COVID-19 expire.

Donnell Williams, president, National Association of Real Estate Brokers (NAREB) says restructured mortgage lending criteria, increased down payment assistance, and an extended forbearance period for homeowners experiencing severe financial burdens must be put in place now to stop a Black wealth collapse seen during the 2008 recession.

“Statistics oftentimes can be ignored or tabled,” Williams said. “However, when the story is told through the eyes of young Black Americans experiencing the rigors of trying to purchase a home for a growing family, you clearly see that structural and institutional remedies are necessary.”

“This year’s SHIBA report lays bare the difficulties.”

Authored by Vanessa Gail Perry, professor of Marketing, Strategic Management and Public Policy at George Washington University School of Business, some of the key findings in the report are:

– The homeownership rate for Blacks who graduated from college is only 3.2 percentage points higher than that of White high school dropouts.
– Black homeowners are less likely to have a college degree.
– Blacks have a higher share of owner households headed by women than any other category of owner households.
– Black borrowers pay significantly higher rates for FHA-backed loans, and higher rates for conventional mortgages.
– In 2018, 53 percent of Black mortgage borrowers obtained FHA or VA loans, compared to 23 percent of white borrowers.
– Only 5 percent of the conventional market was loans to Black borrowers, compared to 15 percent of the FHA/VA market.
– In 2019, 10 lenders were responsible for originating 24 percent of mortgage loans to Black borrowers. Of those 10, only 3 were traditional depository banks.
– Black applicants are more than twice as likely to have their loan applications rejected.
– The Black population in the U.S. is concentrated in major cities. In 2019, 25.6 percent of the Black population resided in areas where the median house price is above that for the U.S. — $253,000.

“These disparities persist because of systemic racism and disadvantages that have accumulated over time,” said Perry. “At the same time, the industry has failed to acknowledge the opportunities presented by this market segment.”

The Black American wealth gap rests in large part on the ever-present institutional barriers Black Americans face at every step of the home buying process says NAREB.

The group adds that while the second quarter of 2020 Black homeownership rate of 47 percent reported by the U.S. Census Bureau represents a 16-year high, the rate lags more than 26 percentage points behind the non-Hispanic white rate of 76 percent for the same period.

In the report, NAREB gives key recommendations designed to support and maintain Black homeownership including:

– Institute aggressive loan forbearance and credit reporting mandates to protect Black homeowners and potential homebuyers from financial devastation due to the COVID-19 pandemic.

– Continue the CARES Act suspension of federal student loan payments, debt collection, and zero interest provisions through the end of the pandemic crisis.

– Restore fair housing regulatory protections formalizing the Fair Housing Act’s disparate impact standard.

– Require the Opportunity Zone funds be directed to long-term residents versus investors.

“There are solutions. There are public and private sector remedies,” Williams said. “NAREB continues to advocate and push the envelope by heightening awareness in all sectors that homeownership not only increases the wealth-building capacity of Black Americans, but also serves to strengthen the nation’s and communities’ economic outlook.”

Sarafina Wright –Washington Informer Staff Writer

Sarafina Wright is a staff writer at the Washington Informer where she covers business, community events, education, health and politics. She also serves as the editor-in-chief of the WI Bridge, the Informer’s...

Leave a comment

Your email address will not be published.