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Broker Study: Major Changes Needed to Boost Black Ownership

NAREB’s 2020 study says Black homeownership will lag without major changes in public policy, lending, down payment assistance and forbearance period extensions. “You clearly see that structural and institutional remedies are necessary,” says NAREB President Williams.

WASHINGTON – The National Association of Real Estate Brokers’ (NAREB) says its 2020 edition of State of Housing in Black America (SHIBA) report comes with a warning: Without major changes in public policy, restructured mortgage lending criteria, increased down payment assistance and extended forbearance period extensions, Black American homeownership will continue to lag.

“Statistics oftentimes can be ignored or tabled,” says Donnell Williams, president of the National Association of Real Estate Brokers. “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.”

NAREB is a “partnered and allied organization” of the National Association of Realtors®. NAREB says it’s the nation’s “oldest and most historic black real estate trade association” and an advocate for “Democracy in Housing.”

SHIBA report findings

  • The U.S. Black population is concentrated in major cities: 62% are concentrated in 20 MSAs. In 2019, one in four (25.6%) Black Americans lived in areas with a median house price above the U.S. median – $253,000.
  • The homeownership rate for Blacks who graduated 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 as well as conventional mortgages.
  • In 2018, 53% of Black mortgage borrowers obtained FHA or VA loans compared to 23% of white borrowers.
  • Black borrowers made up 5% of the conventional loan market compared to 15% of the FHA/VA market.
  • In 2019, 10 lenders originated 24% of mortgage loans to Black borrowers. Of those 10, only three were traditional depository banks.
  • Black applicants are more than twice as likely to have loan applications rejected.

“These disparities persist because of systemic racism and disadvantage that have accumulated over time,” says Dr. Vanessa Gail Perry, one of the study’s authors.

According to the report, the Black American wealth gap results from institutional barriers Black Americans face throughout the home buying process. While the second quarter 2020 Black homeownership rate (47%) reported by the U.S. Census Bureau is a 16-year high, the rate lags more than 26 percentage points behind the non-Hispanic white rate of 76% for the same period.

“There are solutions. There are public and private sector remedies,” Williams says. “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.”

© 2020 Florida Realtors®