Homeownership rates have increased for minorities over the past few years, despite the rise in mortgage interest rates, according to a report by the National Association of Realtors.
The association published its 2024 Snapshot of Race and Home Buying in America report Tuesday to examine homeownership rates over the years and the challenges minority groups are faced with when they purchase a home.
Researchers and economists used data from the 2022 U.S. Census American Community Survey. The report reveals a rise in homeownership but found substantially different rates among groups. Hispanic homeownership rates saw a significant increase at a level of 51.1%. The Asian homeownership rate greatly increased to 63.3%, and white homeownership increased to 72.3%. The Black homeownership rate rose just slightly to 44.1%.
Homeownership is the quickest way to gain wealth over time, and without the asset, the homeownership gap will widen for minority homeowners, especially Black Americans, said Jessica Lautz, the National Association of Realtors’ deputy chief economist and vice president of research.
“What we continue to see is a wealth gap that's quite persistent, and that translates into future generations,” she said. “If you don't have the bank of mom and dad who perhaps can help you with a down payment, that's going to move to the next generation of being held back from homeownership.”
There were sizable trends Lautz noticed in the report compared to last year. One is that dual incomes are needed to afford homes in today’s housing market.
“We do see that marriage rates overall are down and there's people getting married later, but also there's a grain of divorce,” Lautz said. “It's hard to be able to purchase a home and especially for first-time homebuyers who don't have housing equity that repeat buyers do in the market.”
Asian Americans are more likely than any other race to buy a home with dual incomes. They are more successful at entering homeownership because their household income is the highest. Researchers also found that they are receiving generational transfers of wealth as gifts or loans from friends or family to help with down payments.
Although Hispanic homebuyers come into the real estate market with a lower household income, they do not have as much student loan debt as Black homebuyers.
There are more hurdles Black homebuyers must clear to become a homeowner. Potential homebuyers who are Black are faced with more extreme challenges like higher student loan debt, lack of generational wealth transfers, lower household incomes and higher denial rates for mortgages.
“When it comes to discrimination in the mortgage process, we do see that that is pretty persistent,” she said. “Black and Hispanic borrowers generally have a denial rate that's double the rate of what white homebuyers are facing.”
Fifty-one percent of Black homebuyers are entering the market for the first time. Many have to save for down payments while still renting, paying off student loans and dealing with child care costs, which makes their road to homeownership even more difficult.
Researchers asked owners about their recent homebuying experience and whether they experienced or witnessed racism during their interactions with real estate agents or brokers. The most common housing discrimination practice among minority groups was steering. Thirty-nine percent of Black American homebuyers say they experienced it while purchasing a home. Hispanic homebuyers were steered toward or away from neighborhoods at 37%, Asians at 31% and white Americans at 20%.
Fifteen percent of Hispanic and Black homebuyers reported that they witnessed or experienced discrimination in home appraisals. Both Asian and Hispanic homebuyers reported at higher rates that they experienced discrimination with homeowners or real estate agents refusing to show them properties.
The association collected fair housing data from those who were successful homebuyers. It did not collect data from people who experienced discrimination while in the process of owning a home but never actually purchased it.
In Missouri alone, the white homeownership rate is 72%, which is among the highest in the nation. The Hispanic homeownership rate levels at 56%, and Asians are slightly lower at 55%. Meanwhile, Black Americans own homes at 41%, which is below the national average.
The report mirrors homeownership rates in the St. Louis region. Black and Hispanic homeowners in the area have greater challenges when trying to purchase a home, which widens the wealth gap, said Dan Sale, CEO of St. Louis REALTORS.
“Black homeownership, unfortunately, is still below 45%, and that's about where it was when the Federal Fair Housing Act was approved in 1968, which is simply unacceptable,” he said.
The regional association is aware of the challenges that minorities, especially Black people, face when trying to secure a home. Over the past few years, the group has focused its efforts on minimizing steering and Realtor education on racism in homeownership, to try to get more Black and Hispanic St. Louisans in homes.
In St. Louis, white people are nearly twice as likely as Black people to own homes.
In September 2022, St. Louis REALTORS issued a public apology to Black St. Louisans who were discriminated against for decades when trying to purchase a home. It created a 22 initiative plan to help close the racial wealth gap by helping Black people build financial equity.
Since the apology, the association has put in action a number of efforts to reduce racial discrimination within homeownership, including hosting community expos with housing counselors, lenders and other organizations to help increase the chances for Black St. Louisans to own homes. It has also put on a speaker series for its members to learn how to help homeowners of color with their search. The Realtors also have to take Fair Housing simulation courses and attend a diversity homebuying class, so they can understand their role in decreasing the wealth gap.
The group has also created Realtor mentorship programs and awarded six scholarships to help Black St. Louisans start a realty business.
“Let's face it, we didn't get here overnight. This is a problem that has taken years, if not decades, to develop, and it's going to require a lot of hard work,” Sale said. “We're just one organization, it's going to not only require the Realtors, but other business organizations as well, to be part of the solution.”
