A new report from the National Association of Realtors (NAR) has revealed that the gap between white and Black homeownership remains persistently high, with Black applicants getting denied mortgage loans more than twice as much as white applicants.
The U.S. homeownership rate stands at 64.2, the NAR reported, with the rate for non-Hispanic white Americans exceeding the overall rate at 69.8%. However, just 42% of Black Americans own homes, almost 30% less than their white counterparts.
Additionally, just 43% of Black households can afford to buy the typically priced home in the nation, compared to 63% of white households. Affordability among racial demographics varies extensively from state to state: over 60% of Black households can afford homes in Alaska, Kansas, Nebraska, South Dakota and Vermont, for example, but under a third of them can afford homes in California, Colorado, the District of Columbia, Hawaii, Massachusetts, Montana, Nevada, Oregon, Utah, Washington and Wyoming.
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Notably for the lending industry, the NAR’s report found that Black applicants were rejected for mortgages 2.5 times more than white applicants, with rejection rates of 10% and 4%, respectively. Black Americans, at 15%, are three times more likely to dip into their 401(k) or pension as a source of downpayment funds than white homebuyers. And a larger share of Black households carry student debt than white households, by a wide margin of 43% to 21%.
“As indicative of the K-shaped economic recovery, greater numbers of potential first-time homebuyers – many of whom are minorities – are feeling discouraged by disproportionate job losses,” said Lawrence Yun, chief economist for the NAR. “Essentially, they’re being priced out of owning a home because of rapidly rising home prices resulting from historically-low housing inventory. For Black Americans, in general, the greater likelihood of having student loan debt, combined with lower household incomes and accrued savings when compared to the national average, adds to the challenge.”
NAR’s study also found that among those who said they “witnessed or experienced discrimination in a real estate transaction,” 41% of Black respondents said they face stricter requirements due to race. In comparison, 27% of Asian respondents, 19% of Hispanic respondents and 16% of white respondents said the same. Also, about a third of Black homebuyers and a quarter of Asian homebuyers said that they witnessed or experienced discrimination with regards to the type of loan product offered in a transaction.
“This data reinforces the need to implement key policy initiatives NAR developed in concert with the Urban Institute and the National Association of Real Estate Brokers to address the Black homeownership gap,” said NAR President Charlie Oppler. “Specifically, this five-point plan developed in 2019 calls on the nation to: advance policy solutions at the local level; tackle housing supply constraints and affordability; promote an equitable and accessible housing finance system; provide further outreach and counseling initiatives for renters and mortgage-ready millennials; and focus on sustainable homeownership and preservation initiatives.”
