By ERIN FLYNN JAY
Homeownership rates for Black Americans are lagging and leaders in some cities are taking action to turn that around.
According to a report released by the National Association of Realtors last month, minority groups saw increased homeownership rates in 2022. While Asian and Hispanic homeownership rates registered all-time highs at 63.3% and 51.1%, the Black homeownership rate was 44.1%.
The homeownership rate for white Americans was at 72.3% in 2022.
Jessica Lautz, NAR deputy chief economist and vice president of research, said in a statement that the impacts of overall housing affordability affect minority buyers more than white buyers. Minority buyers often pay more of their monthly income in rent, making it harder to save for a down payment.
“Once they are ready to buy, Hispanic and Black Americans have a higher rate of loan denials in the mortgage market,” Lautz said.
Data from the Home Mortgage Disclosure Act shows Black (26%) and Hispanic (22%) applicants have higher mortgage application denials than their White (16%) and Asian (15%) counterparts.
And when a loan is secured, Black and Hispanic buyers face higher mortgage rates. In 2022, 20% of mortgages approved for Black borrowers had rates that exceeded 6%.
Detroit and Baltimore are among the most affordable cities for Black homebuyers and in both cities there are people working behind the scenes to increase homeownership.
Sandee Lutz, National Renovation Sales Manager for CrossCountry Mortgage, LLC, said Detroit is a faith-based city where nonprofits go into churches and hold homebuyer classes.
“Pastors invite them in on Sunday because our people go to church,” said Lutz. They (nonprofits) come in on Sunday and get them excited. They start with some financial literacy training, get them creditworthy, get them jobs if they need jobs, help them to figure out what their down payment requirement is.”
Lutz said nonprofits do this because Detroiters care about their neighbors achieving their homeownership goals.
“We want homeownership,” said Lutz. “We don’t want investors in here because they don’t care about the houses as much. They don’t care about the neighbors. In the city of Detroit, the people themselves are passionate about getting people into homes.”
Lutz has also taken part in homebuyer seminars in communities with homeowners’ associations.
“They have Sunday afternoon gatherings where people come in and they’ll bring food and they’ll bring me in to talk about creditworthiness, how to get into a home, what you need for a down payment, and prepare them for homeownership,” Lutz said.
Most Black applications in Detroit apply for FHA-insured loans and Lutz said that works for them.
“Conventionally you’ve got to have really strong credit right now due to pricing and interest rates,” said Lutz. “The way that Fannie and Freddie price things is different than FHA. FHA is a nice low down payment. You can do a lot more with FHA with credit blemishes, which unfortunately we still have in our city. FHA just works better for that. It’s more lenient, you can get more people into houses.”
An FHA loan also allows for the use of down payment assistance programs.
Lutz said she would love to see financial literacy and home-buying readiness classes in Detroit high schools. “Start talking about those kinds of things with our future generation when they’re very young and then get them into the home.”
In Baltimore, Debbie Dwyer, vice president of growth and development and an associate broker at Garner and Co., noted that 62% of the city population is Black.
Dwyer has seen the effects of discrimination in lending there.
“The appraisal discrimination has been highlighted recently due to a case that a couple in Homeland brought against the appraiser who appraised their home for a refinance,” said Dwyer. “I have also witnessed Black mortgage applicants have their information scrutinized more than white applicants.”
Again, nonprofits are there to help. Dwyer said the nonprofit Live Baltimore has home buyer classes, credit repair, grant opportunities, and provides information about home-buying programs.
The Greater Baltimore Board of Realtors also provides education regarding generational wealth and the opportunities homeownership provides Black families.
Dwyer said they are finding success in reaching people, especially women.
“I believe Black women lead the way in home ownership in Baltimore,” Dwyer said.
Editor Kimberley Haas contributed to this report.
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