A new report from the National Association of Realtors®, Snapshot of Race & Home Buying in America, lays emphasis on the continued need for work for racial equality in real estate.

The report examines the changes in the homeownership rate by race from 2009 to 2019, showing that minority homeownership continues to lag behind the national average rate. NAR officials are calling for housing policy initiatives to help close the gap, which stems from policies that shut generations of minority groups out of wealth gains that can be achieved through long-term ownership.

“The residential housing market’s strong performance during the pandemic helped homeowners enjoy a significant increase in wealth via approximately $1 trillion in additional home equity over the last year,” says NAR’s Chief Economist Lawrence Yun. “However, as indicative of the K-shaped economic recovery, greater numbers of potential first-time homebuyers—many of whom are minorities—are feeling discouraged by disproportionate job losses. Essentially, they’re being priced out of owning a home because of rapidly rising home prices resulting from historically low housing inventory. For Black Americans, in general, the greater likelihood of having student loan debt, combined with lower household incomes and accrued savings when compared to the national average, adds to the challenge.”

The National Association of REALTORS® has implemented a number of initiatives to help combat bias and close the racial gap. Last year, the association implemented its fair housing “ACT” plan, which emphasizes Accountability, Culture Change, and Training. NAR also released a new interactive training platform called Fairhaven, designed to help combat discrimination in the housing market. And, NAR developed an implicit bias training video that highlights strategies to help REALTORS® override biases in their daily client interactions. Both programs are available free to members.

In addition, NAR recently renewed its partnership with the Martin Luther King Jr. Foundation, a relationship that started when NAR became one of the first organizations in 2011 to support the construction of the Martin Luther King Jr. Memorial in Washington, D.C. On Martin Luther King Jr. Memorial Day, January 18, NAR President Charlie Oppler spoke during a virtual celebration and wreath laying, commemorating the 10th anniversary of the memorial’s opening.

NAR’s study shows that the U.S. homeownership rate was 64.2% in 2019. But a closer look at the data shows the breakdown is 69.8% for non-Hispanic white Americans; 60.7% for Asian Americans; 48.1% for Hispanic Americans; and 42% for Blacks. The Black-white homeownership gap is nearly 30%, NAR notes in the report.

“This data reinforces the need to implement key initiative identified in concert with the Urban Institute and the National Association of Real Estate Brokers to address the Black homeownership gap,” says Oppler, referencing a five-point plan, developed in 2019, that calls on the nation to:

1. Advance policy solutions at the local level;

2. Tackle housing supply constraints and affordability;

3. Promote an equitable and accessible housing finance system;

4. Provide further outreach and counseling initiatives for renters and mortgage-ready millennials;

5. Focus on sustainable homeownership and preservation initiatives.

Additional findings from “Snapshot of Race & Home Buying in America”:

Affordability: Forty-three percent of Black households can afford to buy the median home compared to 63% of white households, 71% of Asian households, and 54% of Hispanic households, NAR’s report shows. But that can vary greatly by state. For example, Black households are the most likely to be able to afford to buy a home in Alaska, Kansas, Nebraska, South Dakota, and Vermont. On the other hand, less than a third of Black households can afford to purchase a home in California, Colorado, Hawaii, Massachusetts, Montana, Nevada, Oregon, Utah, Washington, Wyoming, and the District of Columbia. For comparison, less than half of white households can afford to buy a home in only four states: California, Hawaii, Oregon, and Washington, the study notes.

Multigenerational homes: Nearly a quarter of Asian Americans, 18% of Hispanic Americans, 15% of Black Americans, and 10% of whites purchased a multigenerational home. Some of the top reasons are so adult children or relatives could move into the home and save money. Black and Asian Americans were more likely to say that they wanted "a larger home that multiple incomes could afford together” as the reason for purchasing a multigenerational home.

Student loan debt: Black households are more than twice as likely as white households to have student loan debt (43% versus 21%). The median student loan debt for Black households is $40,000. Student loan debt can pose a major hurdle for those saving for a down payment on a home.

Down payment resources: Black Americans and Hispanic Americans (15% and 10%) were three to two times more likely than white and Asian Americans (5% each) to use 401(k) or pension funds as a down payment source for a home purchase. “Such actions can negatively impact future wealth growth and savings attainment,” NAR cautions.

Housing discrimination: Minorities tended to reveal a harder time in real estate transactions. Of the survey respondents who said they witnessed or experienced discrimination in a real estate transaction, 41% of Black respondents said they felt they faced stricter requirements because of their race compared to 27% of Asian respondents, 19% of Hispanic respondents, and 16% of white respondents. About one-third of Black home buyers and a quarter of Asian home buyers said they witnessed or experienced discrimination with the type of loan product they were offered. The report shows Black home buyer applicants are rejected for mortgage loans at a rate 2.5 times greater than white applicants.

View the full report: Snapshot of Race & Home Buying in America

Source: National Association of Realtors®