Between the spring of 2016 and the fall of 2019, the overall homeownership rate in the United States rose just over two percent.
The homeownership rate for white Americans has consistently been higher than 71 percent in that time, but the overall growth doesn’t tell the full story.
“While the increase in the overall homeownership rate is encouraging, we see that there continues to be [a] significant racial homeownership gap in America that needs to be addressed,” says Nadia Evangelou, Senior Economist and Forecast Director with the National Association of Realtors.
Last week, the association issued a report on race and home buying in the country. According to the report, only about 40 percent of black Americans surveyed owned a home, and the gap between them and white homeowners has only grown.
“In the last ten years, homeownership rates for African Americans increased in only three states: in Delaware, South Dakota [by] about 17.8 percent, and in Vermont [by] about 2.2 percent,” Evangelou adds.
In Wisconsin, homeownership among black Americans is the third lowest in the nation. Over the last ten years, black homeownership has dropped from every one in three African Americans to just over one in five African Americans.
Joaquín Altoro, CEO for the Wisconsin Housing and Economic Development Authority, says that part of the problem is the lack of affordable housing.
“There’s a need for housing; however, the supply is affected, and when the supply is down and we have a large cadre of buyers, you can imagine that affects the prices of homes and they go up” Altoro says. “I hear stories anecdotally from friends and family that they’re putting a house on the market and it stays on the market for a day, [sometimes] hours. I hear from those that want to put an offer on a house, and it has multiple offers.”
Another barrier to buying a home? Getting a private loan from a bank.
Kimberly Robinson is a homeowner on Madison’s east side who purchased her home through a program administered by the Urban League of Greater Madison.
Robinson says trying to get a loan from her bank was out of the question.
“The banks want [a] high credit. They want to make sure your credit is there, and they want you to come up with at least ten thousand or so [for a down payment],” Robinson says. “For most black families that [don’t] own their own business or [are] working themselves into a grave, we don’t have that type of money.”
High debt and low income are barriers to getting a loan, but black home buyers face barriers to homeownership regardless of income level.
That’s according to Jim O’Keefe, Director of Madison’s Community Development Division, a public investment agency that works to support the city’s low- and moderate-income residents.
“Data shows that between 2006 and 2016, the denial rate for black households seeking mortgage financing was three times that for white households,” O’Keefe says. “Even among moderate or higher income households, disparities exist in the private lending market between and among different races and ethnicities.”
Countrywide, black homeowners typically had just over $38,000 in student loan debt, similar to Asian homeowners and about $8,000 more than white buyers. But black homeowners were about three times more likely to be rejected for a mortgage loan application than members of any other group.
O’Keefe says the City of Madison can be part of the solution to reducing that disparity.
“We work with the private financing market and with realtors to promote homeownership among people of color and educator lenders about resources that are available to home buyers in Madison,” O’Keefe says. “And we administer a small down payment assistance loan program called ‘Home-Buy the American Dream’ that provides direct loans to prospective home buyers up to $20,000 to reduce the amount of financing that might be needed through the private lending market.”
A spokesperson for the Urban League of Greater Madison says the Urban League has eight homes still open in its lease-to-own program, and that it is hoping to fill four of those homes this year.