By: Charlie N. Jones
To have a clearer idea of the black homeownership crisis, you have to look at the crater-sized homeownership gap between White and Black Americans today! It has grown significantly over the last fifty years. The recent outbreak of the Coronavirus did not make things easier for the Black community. Many resorted to unanticipated methods to keep a hold of their homes. Some had to get tenants to occupy the family property, as a way to be able to pay for their mortgages. The financial load associated with maintaining their homes and properties became unbearable. Therefore, many Black Americans have been pushed to the brink of selling their homes to ease their financial burdens.
Refinancing has been one of the go-to strategies that offer the black population a lifeline for homeownership. Refinancing opens up doors for them to get more affordable mortgage repayment rates. However, even refinancing becomes a challenging task when you consider that many Black Americans are unemployed! For example, the Black unemployment rate stood at approximately 7% at the end of 2021. In such an instance, coming up with proof of income to get more affordable mortgage repayment rates is impossible. Research by the Urban Institute in May 2020 showed that Black homeowners had a higher likelihood of deferring their mortgage payments because of the financial difficulties caused by the Covid-19 pandemic. Consequently, this also contributed massively to the growing disparity between homeownership of the White and Black communities.
Statistics from the U.S. Census Bureau provide further proof of this problem. Compared with other minorities, the homeownership rate of Black Americans is estimated to be the lowest! Looking at the second quarter of 2020 as an example, Black homeownership rates lagged at around 47%. On the other hand, Native Hawaiian, Pacific Islanders, and Asians had a homeownership rate of about 61.4%, with the Hispanic Americans having nearly 51.4%. However, White Americans boasted a massive 76% homeownership rate.
The widening gap between White and Black homeownership can be attributed to the longstanding discrimination and unfair housing policies that have been practiced for many years. The Urban Institute estimates that the homeownership gap between the White and Black Americans today is about 30%. The most shocking aspect of this statistic is that this current gap is bigger than in 1960 (27%), when housing discrimination was surprisingly legal!
At the time, Black Americans were not allowed to buy homes and pass them down to their children as a way of amassing generational wealth. Further restrictions led to getting denied mortgage loans and getting shut out from living in some neighborhoods due to their skin color. It was impossible to buy and own homes in White suburbs, even if they could afford it! The bad homeownership policies at the time ensured that Black Americans were restricted to living only in predominantly black neighborhoods.
What Efforts and Policies Have Been Previously Implemented or Must Be Implemented in The Future to Address the Homeownership Crisis?
- Past efforts
Over the years, there has been considerable effort to address the discrimination associated with black homeownership. For example, the Fair Housing Act that was passed in 1968 made all restrictions placed on anyone, especially Black Americans, illegal. Its primary objective was to guarantee equal housing opportunities for everyone. It sets the foundation for all housing equality efforts to be successful.
- What Should Be Done Now?
- Ramping up efforts to tackle rising taxes.
High taxes are one of the main reasons many people, particularly from the black community, are ejected out of their homes. These high taxes can contribute to the growth homeownership gap and it is therefore crucial to put reasonable tax regulations in place. If there are considerably high increases in taxes, landlords will have to increase rent. Since many Black Americans are grappling with unemployment, they may end up losing their homes.
- Increasing access to down payment assistance programs.
Increasing access to programs such as advanceable tax credits and matched saving programs suitable for low-income homebuyers is an excellent place to start. Similarly, more should be done to ensure these underserved Black Americans have access to business and mortgage credit. It will reduce discrimination by ensuring access to capital is improved.
- Adopting credit scoring practices that are not discriminatory.
Creditworthiness is an essential aspect that is used to evaluate homebuyers. A lot of emphasis is placed on credit card and loan payments. These metrics usually disqualify many Black Americans because of the misconception that Black homeowners are poor payers and thus, highly risky investments. The fact that many of them are unemployed makes the situation worse.
- Relief efforts and stimulus packages should be continually offered to current and prospective Black homeowners.
It is important to address the harsh impact of the Covid-19 pandemic. As much as the increase in Black homeowners has been looking promising, the Coronavirus pandemic dented this progress. Many Black homeowners have been increasingly facing difficulties in making mortgage payments. The stimulus packages and relief efforts will help ease their financial predicaments and retain their homes.
The black homeownership crisis results from the longstanding racism and unfair housing policies that have been around for many years. The recent outbreak of the Coronavirus pandemic made the situation for the Black community even worse. They have found it more difficult to keep up with their mortgage payments. Therefore, retaining their homes and property has become harder. The high unemployment rate of the Black Americans has also made the homeownership gap challenging to overcome. However, past efforts such as the Fair Housing Act of1968 have tried to address the homeownership crisis and reduce this gap. Improving the Black community’s access to down payment assistance programs will also help deal with this crisis. In addition, the stimulus packages introduced during the outbreak of the Coronavirus pandemic should still be provide. These relief efforts will help black homeowners to make stay on track with their mortgage payments and retain their homes. Consequently, these efforts will contribute to narrowing the large homeownership gap effectively.