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The state of the housing market for first-time homebuyers and communities of color

Here's how Radian is helping further homeownership

With low housing inventory and rapid home-price growth, homeownership can seem less and less attainable for several groups of potential homebuyers. HousingWire sat down with Radian CEO Rick Thornberry to learn more about the state of the housing market and how Radian is helping further homeownership.

HousingWire: What is the current state of the housing market for first-time homebuyers and communities of color?

Rick Thornberry: The rapid growth of home prices in recent years has pushed the dream of homeownership further out of reach for many first-time homebuyers. Record-high demand for homes coupled with historically low inventory has driven prices up precipitously. The COVID-19 pandemic has only exacerbated this supply and demand imbalance, especially for entry-level homes. According to the Radian Home Price Index, home prices rose 9.2% from April 2020 to April 2021, with the median home price surging by more than $20,000.


While these metrics are an advantage to existing homeowners who can capitalize on home appreciation, it presents a challenge for new homebuyers trying to enter the market. A downpayment can be a major barrier for first-time buyers—student debt, stagnating wages, and the increasing cost of rent all make it difficult to save. Decades of social and economic factors have made it even more challenging for minority homebuyers to become homeowners. And, the barriers to minority homeownership have only gotten worse during the COVID-19 pandemic given its disproportionate impact on people of color. According to first quarter 2021 Census data, homeownership rates for Black and Hispanic Americans—45% and 49%, respectively—remain significantly lower than the White homeownership rate of 74%. 

Despite these challenges in the current market environment, there are positive factors that benefit homebuyers seeking to achieve homeownership. For example, today’s historically low mortgage interest rates offer buyers more spending power. Purchasing a home is still more affordable than renting in two-thirds of the country. And, a first home becomes a stepping-stone for first-time buyers to build wealth. In fact, equity gained through homeownership is a primary means for Americans to accumulate wealth—especially for Black households, according to the Urban Institute.

HW: How can housing professionals work to make homeownership more accessible and sustainable for both of those groups?

RT: There are no simple solutions to the housing supply shortage and affordability crisis, but our industry must address these challenges to find solutions that make homeownership more accessible and equitable for all Americans. Expanding access to affordable and sustainable homeownership will require a wide variety of approaches and a coordinated effort from many different participants.

So, what can we as an industry do to help alleviate the housing shortage? Much of it comes down to supporting regulatory reform and policy that creates more affordable housing. Municipal regulations, such as zoning restrictions, costly permitting and minimum lot sizes, must be reformed to expand developable land and reduce timelines and costs. Allowing for more manufactured housing and better incorporation of innovative construction approaches such as 3-D printing technology and panelized,  and container construction can help cut the cost of construction. Additionally, there is an opportunity to create more entry-level homes with incentives for rehabilitation and remodeling of abandoned and distressed properties.

In conjunction with these efforts to increase the affordable housing supply, there needs to be a focus on assistance for first-time homebuyers and minority homebuyers. Programs to help renters work towards homeownership and downpayment assistance programs, especially ones that are structured to avoid overleveraging, will help buyers who are struggling to save. Our industry should also advocate for a regulatory framework that makes it easier and more sustainable for banks to provide low-dollar loans and for builders to profitably build smaller, more affordable, homes. And, federal policymakers need to recognize the importance of low-downpayment lending in this market, especially for minority, low-income, millennial, and first-time homebuyers.

HW: What solutions does Radian offer with these goals in mind?

RT: Mortgage Insurance (MI) offers a pathway to affordable, responsible, sustainable homeownership by addressing the greatest barrier of entry: the required downpayment. As a private mortgage insurer, we help low- and moderate-income borrowers who are not able to make a downpayment of 20% to qualify for a conventional government sponsored enterprise (GSE) loan. According to USMI’s annual report, more than 2 million homeowners qualified to purchase or refinance their home in 2020 thanks to private MI. Of these homeowners, nearly 60% were first-time homebuyers, and more than 40% had incomes below $75,000.

We believe there has never been a time that access to affordable and sustainable homeownership has been more important in our country, as we work together to support the very important role affordable homeownership plays in building wealth creation within minority communities. 

We are also working to improve the entire homebuying experience with a suite of services across the mortgage and real estate spectrum. One of these solutions is our titlegenius offering that launched in Florida in May, which empowers consumers to shop for and save on title and closing services. 

HW: What partnerships does Radian have in place to help further homeownership? 

RT: Radian has joined forces with trade associations that share our commitment to helping more Americans achieve their dream of homeownership. We proudly support the National Association of Hispanic Real Estate Professionals (NAHREP) in its mission to increase the homeownership rate among Latinos. We also partner closely with the National Association of Minority Mortgage Bankers of America (NAMMBA), which is dedicated to the inclusion of minorities and women in the mortgage industry and advocating for sustainable homeownership in local communities.

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