Homebuying season is in full swing, and buyers face tough competition in a decidedly sellers’ market.
With demand for housing strong, fewer houses on the market, and mortgage interest rates at their lowest in years, African Americans and first-time buyers face an uphill battle to secure a dream home.
“It is a sellers’ market for African Americans, particularly as we have such a huge gap in our ownership status,” said Chuck Bishop, the senior vice president and head of diverse segments at Wells Fargo. “African Americans are going to see strong competition for houses with shorter listing times because homes are selling at about 18 or 19 days, depending on the community.
“When you have a hot real estate market like in Washington, D.C., and you see really quick turn times on listings, it tells the customers that they are going to have to be prepared as they embark on this journey,” he said.
Professionals at Wells Fargo are working to assist buyers, particularly African Americans.
The banking giant expanded several programs to bolster minority homeownership.
In 2017, Wells Fargo pledged a $60 billion commitment to increasing Black homeowners by at least 250,000 by 2027. As part of the commitment, the company is dedicating $15 million to homebuyer education and counseling.
“A commitment in support of Hispanic homeownership is also in place, and each program is supported by extensive investment in financial education,” Bishop said, adding that officials at Wells Fargo are keenly aware of racial disparities in homeownership, and the bank is committed to playing a role in closing the homeownership gap.
“While we don’t have the ability to impact home prices, we do have an opportunity to affect mortgage cost,” Bishop noted.
Among the programs touted by Wells Fargo is the bank’s Dream. Plan. Home. Mortgage and Closing Cost Credit. The program contains components to assist potential buyers.
The closing cost credit, available in certain counties in the D.C. area, will provide up to a $5,000 credit that buyers can apply toward closing costs and use for items like appraisal fees, processing fees, title-related fees, recording fees, and local and state tax stamps.
Bishop said that borrowers with a combined income of up to 80 percent of the region’s median family income level are eligible for the program if they purchase a home in which they plan to live.
“That’s a healthy contribution for this market based on sales price,” he noted. Other components and programs offered by Wells Fargo include allowing buyers flexibility with a limited credit history, less-than-perfect credit score, and those with non-traditional credit.
“Limited credit or FICO score doesn’t mean we are not creditworthy,” Bishop remarked. “It could mean that we want to avoid debt. Look, my mother always said, ‘if you don’t have cash, there’s no need to get it now.’”
Bishop noted that for some loan programs, Wells Fargo would consider timely rent and other forms of nontraditional bill payments when measuring creditworthiness.
“We want to help people who need help the most,” he proclaimed, adding that the District and surrounding areas have nonprofit agencies and HUD-approved housing counselors that can help guide individuals to find grants and ways to secure down payment funds.
Bishop also underscored the importance of being prepared during a decidedly sellers’ market.
“It is important for the customer to find the money first and focus on their bid,” he said. “Make sure you get pre-approved and have all documentation in place, like tax returns, extension filings, bank statements, and paystubs.
“When it comes to buying a home, it is an emotional initiative,” Bishop said. “You are talking about someone’s residence, their money, and their family. Buying a home is an emotional experience, and because of that, I encourage people to be really thoughtful and patient with the process. Have a plan, get pre-approved, and identify what’s critical and what is not critical in the home because, in this market, you will absolutely have competition.”