the National Association of Real Estate Agents presented a five-point plan for how the real estate industry can step up its action to help increase the number of black American homeowners.
While home ownership rate for black households slightly improved and now stands at 44%, compared to an overall U.S. rate of 65.3%, just a year ago it fell to 40.6%, which was not just the lowest level in the world. Census office quarterly data goes back to 1994, but it was also the smallest share recorded for black households since the 1950 decennial census, when it was 34.5%.
NAR Chief Economist Lawrence Yun said that “given the events of the past few weeks, he has highlighted the progress, or the lack of progress, within the African American community,” adding that access to home ownership is an essential source for the creation of financial wealth.
Yun added that this list is not new, but rather something that the association has been pushing for and highlights the conversations and discussions that have taken plans among the members. The five point plan includes:
- Build more houses to increase the supply: Yun said that since the pool of potential first-time buyers is higher among the minority population, if the industry can increase supply, it could help minority households lock up a house.
- Build more houses in the Opportunity Zones: Yun asked the question, “Since the industry needs to build so many houses, why not build or sell houses in the areas of opportunity to help revive some of these areas?” He added that there was even a tax break in some geographically defined opportunity areas for developers to enter and build homes, thus helping to revitalize economically struggling areas.
- Increase access to down payment assistance: As family members step in to help resolve affordability issues, NAR said it’s even more difficult for black Americans to get substantial financial help from family members. They added that increased access to federal down payment assistance based on a certain income threshold is vital, especially for black Americans.
- Strengthening the FHA loan program: Yun explained that many minority households are able to become first-time buyers using FHA mortgages, making the product an important source of finance. NAR said transferring federal dollars to strengthen the FHA program could reduce mortgage insurance premiums and monthly mortgage payments.
- Develop alternative credit scoring models: NAR pointed out that expanding credit scoring models to include rent and utility payments would help black Americans improve their credit scores. Yun also shared an estimate of the National Association of Real Estate Brokers this alternative credit rating would buy 115,000 black Americans per year.
To turn these five points into tangible change, Yun suggested that real estate agents should take these points with them when speaking with their local officials, showing their leaders how they can help with minority home ownership. . This is all the more important as things like housing supply are often determined locally with regard to zoning rules and fees.
Yun concluded by adding that the industry needs to make sure it doesn’t make the mistakes of the past, especially 10 years ago with subprime loans. The homeownership rate for black households fell more than seven percentage points from 47.8% at the start of the financial crisis to a record low last summer after some predatory lenders focused on minority communities.
“We need to ensure successful home ownership, not just temporary home ownership,” Yun said.
