Black Americans still face massive housing barriers

Nationwide, 16% of Black Americans who apply for mortgages are rejected — against only 7% of white Americans

Black Americans continue to face greater financial and generational barriers to homeownership than white Americans, with a recent study finding that only 45.1% of Black Americans bought or own their home as of the first quarter of 2021 — against 73.8% of white Americans.

Per Redfin, 23% of white homeowners made no financial sacrifices to buy their first home, versus 14% of Black homeowners. Meanwhile, 30% of Black respondents took an extra job to afford their first home, versus 22% of white respondents, the study found. 

When looking at financials, 21% percent of Black homeowners earned $150,000 or more when they bought their first home, versus 11% of white homeowners. And 58% of white homeowners earned less than $50,000 when they purchased their first home, versus just 34% of Black homeowners. 

“These findings suggest the financial standard for becoming a homeowner is higher for Black people than white people, making it more difficult for Black Americans to buy homes,” said Daryl Fairweather, Redfin chief economist. “Homeownership is closely tied to the American ideal of freedom, and specifically financial freedom. The fact that Black buyers report earning more money and making more financial sacrifices to enter the homeowner class is one example of how difficult it is for Black people in this country to achieve the American dream.” 

When responding to a June Redfin survey of 1,500 homeowners, 74% of Black respondents said they had parents who were homeowners, versus 84% of white respondents. Sixty-seven percent of Black respondents have grandparents who are homeowners, versus 72% of white respondents.

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A 2018 study from the Brookings Institute found that in the average U.S. metropolitan area, homes in neighborhoods where the share of the population is 50% Black are valued at roughly half the price as homes in neighborhoods with no Black residents. The difference in appraisals has led to a $156 billion cumulative loss in value nationwide for majority-Black neighborhoods, the study claimed.

Nationwide, Redfin reported that 16% of Black Americans who apply for mortgages are rejected, compared with 7% of white Americans. Black homebuyers are also more frequently turned down due to debt and credit scores than their white counterparts.

“Black people who succeed in buying a home have to be Superman or Superwoman,” said Bryan Greene, vice president of policy advocacy for the National Association of Realtors. “They need to have higher degrees, they have more debt, they face persistent rejection and generally carry around bigger burdens to achieve the same goal as white people.”

Earlier this month, groups including the Department of Housing and Urban Development (HUD), the Mortgage Bankers Association, the National Association of Realtors, the National Association of Real Estate Brokers unveiled a plan to increase Black homeownership significantly by 2030. The agency says the groups have pledged to create 3 million more Black homeowners by the decade’s end.

On Wednesday, the Consumer Financial Protection Bureau (CFPB) said it will be tightening the screws on mortgage servicers and originators that violate consumer protection laws — including redlining, the racist housing policy that effectively blocked many Black families from obtaining mortgages throughout the middle of the 20th century.

The CFPB found that lenders engaged in deceptive business practices, including violations of the Truth in Lending Act and the Equal Credit Opportunity Act, and provided inaccurate data on mortgage loans. The agency did not name the lenders or servicers it examined, and did not levy any fines or penalties.

The CFPB said one lender — which raised red flags when it received fewer applications from minority neighborhoods — engaged in redlining. In the lender’s direct marketing and open house materials, the models were white. The lender’s offices were concentrated in white neighborhoods, and nearly all of its loan officers were white. The CFPB also found that loan officers sent internal emails “containing racist and derogatory content.”

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