As the nation struggles to gain traction in its economic recovery, the housing market has emerged as yet another touchpoint of racial disparity in the US. Black future homeowners are facing an uphill battle when purchasing a new home, one study by NeighborWorks America, a nonprofit dedicated to providing resources to potential homebuyers, found.
The Black Information Network spoke to NeighborWorks CEO Marietta Rodriguez to get a better understanding of the housing crisis our community is facing.
“The opportunity to pursue the American Dream...is still far too limited, especially in communities of color across all income bands,” Rodriguez said. Home ownership, she noted, provides families and individuals to have a different type of voice in their communities.
Since the 1960s, Black Americans have faced challenges in securing loans to buy homes due to redlining, and discriminatory lending laws. Here's a better look at what's impacting our ability to buy homes in today's market.
The Pandemic’s Financial Toll
The COVID-19 pandemic and its economic toll, Rodriguez said, “is absolutely a driving factor in homeownership.”
“We are finding that one in three Americans are looking for a new place to live, which is a very different story from a year ago,” she said. Prior to the start of the pandemic, Black Americans were more vulnerable to financial fluctuations because of the recovery from the 2008 financial crisis. Paired with greater portions of student loan debt, the widening gap between Black and white Americans purchasing a home should come as no surprise.
The pandemic illuminated how much of a “hub” homes are for families and individuals. Seeking homeownership, the survey found, has become a part of some people’s quest for greater security, though the disproportionate financial devastation experienced by Black Americans is barring some people’s pursuit.
Credit is Blocking Many From Homeownership
“Roughly three in 10 people have had a financial application denied due to their credit score,” Rodriguez said. “We learn that 43% of Black adults had applications denied because of credit,” she said, noting that 63% of Black adults don’t think they would even be approved for a financial application.
To help those who aren’t feeling financially confident or are facing financial challenges stemming from the pandemic, Rodriguez suggests seeking help from a nonprofit housing counseling agency, like NeighborWorks, which provides low-cost and free services to help with homeownership finances.
“They also have access to programs such as down payment assistance, closing cost assistance, low interest rate mortgages,” she added. Addressing the widening homeownership gap, the CEO said, will also require helping people with their personal finances.
What Future Homeowners Should Keep in Mind
“For Black households, we’re hearing that there is high interest in seeking guidance and resources that can help,” Rodriguez said. To navigate the current housing market, Rodriguez suggests potential homebuyers to tap into federal and state resources specifically designed to get people into homes.
Before hopping on home buying websites, Rodriguez suggests getting a plan together to navigate the financial components of owning a home. NeighborWorks has organizations all over the country that offer individualized counseling for future homeowners.
Knowing what you can afford and what your credit profile actually looks like can help you avoid borrowing more than you’re comfortable with, Rodriguez noted.