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Why It’s Still So Hard for Black Americans to Increase Home Ownership. New Report Finds Biased Home Buying Practices Get ‘Creative’

Housing has always been an explosive subject in Black America. Following slavery, Black Americans were restricted to where they could live in a segregated America. Housing discrimination also continued after the era of Jim Crow, as Black America was left out of home buying and wealth building through racist policies such as redlining.

Photo by Kindel Media from Pexels

Flash forward, and what does the state of housing in Black America look like in 2021? A new report from the National Association of Real Estate Brokers reveals that while blatant housing discrimination has decreased through the years due to the 1968 Fair Housing Act, it is far from being completely resolved.

The 2021 State of Housing in Black America report found that the gap in homeownership between Black and white families is much larger now than when housing discrimination was legal. The report also revealed new tactics being used within the home-buying industry to discriminate against Black homebuyers.

In addition to presenting stats, the report also provided insight on how to close the homeownership gap in the U.S. 

At present, the Black homeownership rate was 44.6 percent compared to 74.2 percent for whites as of the second fiscal quarter of 2021, according to the U.S. Census. This has resulted in a gap of 29.6 percent. In 1960, before the Civil Rights movement and Fair Housing laws, the gap reflected 38 percent for Black homeownership and 65 percent for white homeownership.

“Blacks have made little if any, strides at closing the homeownership gap,” Lydia Pope, president of NAREB, said in the report. “Systemic discriminatory regulations and policies continue to thwart any meaningful effort at increasing Black homeownership.”

Black Homeownership In Major Metro Areas Lags

The national average of homeownership is 45 percent, yet Black homeownership in major metropolitan cities is lagging. The lowest rate of Black homeownership in the U.S. was in Minneapolis, where 25 percent of Black residents are property owners, according to the report. The NAREB report also showed that, in 2020, Blacks represented 24 percent of the population in New York, but made up only nine percent of loan recipients. Cities such as Detroit, Memphis and Chicago had the highest levels of loan origination. 

Bias Homebuying Practices Get “Creative” and Discrimination Prevails 

Regulations established by the Fair Housing laws have lessened the persistence of traditional housing discrimination, the report finds. However, discrimination still exists. 

“There are new biased practices that are obstructing Black homeownership in communities across the country,” Pope said. “For instance, housing providers often don’t advertise available units and discriminatory digital marketing has become more common due to the proliferation of social media and online housing advertising. We need new tools to address this new wave of housing discrimination.” 

Discrimination is present throughout the home-buying process — from the application through the appraisal process. For instance, in 2020, Black mortgage loan denials were 16 percent — more than double of white denials at seven percent. The report found this data has not improved since 2019. 

How To Fix It 

One of the greatest reasons applicants are rejected for mortgages is debt-to-income ratio, with a significant reason for the high debt-to-income ratio being student loan debt. Student loans are weighed by lenders in varying ways. However, the National Association of Mortgage Brokers advocates for adopting Fannie Mae’s guidelines, which would allow more Black mortgage applicants to participate in the home-buying process.  

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