Black home ownership struggles while U.S. housing market make a complete recovery

Low inventory possible factor in why African-American home ownership trails that of whites by a whopping 30 percentage points.

The home-ownership rate in the U.S. appears to be stabilizing as Americans rebound from the 2007 recession that left millions unemployed and home values underwater, according to the report by Harvard University’s Joint Center for Housing Studies. But one group was found to not share in this recovery, African-American households, aren’t enjoying the benefit of this recovery, even as whites, Asian-Americans and Latinos slowly see gains in home-buying and property values. The centre said the disparity between whites and blacks is at its highest in 70-plus years of data. This trend is not unusual, the history of this country has always seen our plight as lagging behind all other ethnic groups.

Experts say reasons for the lower home-ownership rate range from historic underemployment and low wages to a recession-related foreclosure crisis that hit black communities particularly hard. In 2004, the pinnacle of U.S. home-ownership, three-quarters of whites and nearly half of the black population owned their homes, according to the Harvard study. But as the US financial crisis hit our community fell behind and to date are still in a quandary.

By 2016, the African-American homeowner rate had fallen to 42.2 per cent and lagged 29.7 percentage points behind whites, nearly a percentage point higher than in 2015. Those numbers show that the problem has still not stabilized but continues to fall because the lack of affordable housing and stricter lending are making it harder for first-time buyers to obtain what traditionally has been considered an essential part of the American dream and a way to build wealth. As I spoke about the building of wealth in our community lies mainly in home-ownership.

“It has always been historically and systemically harder for blacks, and we are seeing very little progress, now we’re seeing in the inner-city issues that further complicates our situation.

An AP analysis of U.S. Census Bureau statistics shows some pockets of the Midwest and California that have some of the lowest home-ownership rates for African-Americans in the country, while some areas of the South had the highest, low inventories of affordable housing adds to the problem, says the incoming president of the National Association of Real Estate Brokers, which was founded in 1947 to promote fair housing opportunities for minorities. The Atlanta area has only about 30,000 properties for sale through real estate agents, compared with approximately 100,000 about 13 years ago.

“You are seeing subdivisions going up everywhere in terms of newer homes but this growth is occurring in communities of other ethnic groups”.

African-Americans snapped up homes at the peak of the housing bubble, lured by generous lending and a glut of affordable properties, housing experts say. Lenders also targeted minorities, pushing riskier subprime loans even when applicants qualified for lower-interest loans.

Examples of this disparity: Graciano de La Cruz, 70, grew up in San Francisco, the child of a Filipino father and an African-American mother. In 1960s, the city condemned his mother’s house for redevelopment in the historically black Fillmore neighbourhood. She was given a housing voucher and became a renter, losing any equity she could have passed to her children.

He and his wife, Buena, who is Filipino-American, must now sell their own home of two decades to pay off a debt that stemmed from a “pick-a-payment” loan with World Savings Bank in August 2006.

They asked for a loan with a fixed rate, but the lender said an adjustable rate package would meet their needs. The initial monthly payment for the pick-a-payment loan was about $1,700.

Then Buena’s health declined, and Graciano lost his job. In 2014, Wells Fargo, which had purchased World Savings, issued a notice of default. By then, the monthly payments had mushroomed to roughly $3,000.

“I can’t sleep,” de la Cruz said. “I fear I might get a knock on the door, and the banker will come up with sheriff’s agents talking about, ‘You gotta leave now.’ ”

The pick-a-payment loans drew wide government scrutiny. In 2010, Wells Fargo agreed to pay $24 million to end an investigation by eight states, including California, into whether lenders later acquired by the bank made unsustainable mortgages without disclosing the terms.

Wells Fargo has vowed to help create more than 250,000 new African-American homeowners to address declining home ownership. But spokesperson Alfredo Padilla said the bank could not find a way to help the couple.

Yul Dorn, a 60-year-old pastor in the San Francisco area, says Chase misapplied a payment he made in 2008 and then failed to keep proper records. He made several payments on a modified trial loan, which the bank then denied.

In 2015, the home he bought for $168,000 in 1996 was sold for $482,000. In May, the new owner sold it for $850,000. A Chase Bank spokesperson Suzanne Alexander said foreclosure is always the last option, pursued only when other avenues are exhausted (really).

Yet there are a slim few bright spots in our home-ownership front.

In the New Haven metro area in Connecticut, for example, reports say there were increases in Black home ownership from 2010 to 2015. Georgia’s Albany area, which is predominantly African-American, saw a 15 per cent increase from 2005 to 2015.

In Detroit, a largely African-American city wracked by foreclosures, the mayor last year announced a financing program to make home-buying easier. Previously, banks couldn’t provide loans for more than a home’s appraised value, which wasn’t enough to cover needed repairs or renovations.

And in Jacksonville, Florida, 32-year-old Natasha Jones recently bought her first home, a three-bedroom listed at $135,000. The single mother of three worked with a member of the nonprofit NeighborWorks America, which supports community development, to clear up her credit and save for a down payment on a Wells Fargo-financed loan.

“I am my mom’s first child to own my home,” Jones said. “Now that we’re in our own place, I’m redoing the flooring the way I want to. I’m painting the kids’ walls. It’s ours.”

Those above success are far to limited to make any significant dent in our home-ownership problem. And all out effort has to be found that targets increasing this trend is our only solution. The finances are there, other communities are receiving all the monies and support to recover their communities.

E. Bishop III The Money Connection

“Follow The Money People”