If you asked Donnell Williams, president of the National Association of Real Estate Brokers (NAREB)—an organization dedicated to housing for all, particularly among Blacks—what keeps him up at night, he would respond without hesitation: homeownership rates. More specifically, homeownership rates among the Black community.
According to recent data from the U.S. Census, homeownership rates among Blacks have hovered around 45 percent for the last three years, creeping up to 46 percent by the third quarter of 2020. But compared to the overall homeownership rate of 67 percent, and the non-Hispanic White homeownership rate of 76 percent, these recent gains only serve to shed light on an urgent need to effect change.
“That’s why in August of 2019, I called a cease and desist in declining homeownership rates among Blacks in the United States,” explained Williams.
But Williams didn’t just call for an end to the problem, he also provided a solution: a sweeping community outreach program aimed at young Blacks to educate them on financial planning skills and the specifics of home-buying called, “House Then the Car.” The goal is to create connections with younger millennials and older Gen Zs through programming on college campuses, civic groups and churches.
Anyone in the real estate industry can tell you that homeownership is one of the best ways to build individual and family wealth. So what’s preventing Blacks from becoming homeowners?
The Urban Institute cites higher student loan debt and lower FICO scores as two key factors, and NAREB’s 2020 State of Housing in Black America report points to uneven mortgage lending practices as a significant barrier.
Williams also believes the Black community was also impacted at higher levels by the subprime meltdown, subsequent foreclosures and now lack of confidence in homeownership.
“1.7 million Black millennials have purchasing power but have chosen not to purchase a home,” said Williams. “That indicates an incredible opportunity to share critical information that can lead to more equitable homeownership rates in this country.”
He believes the “House Then the Car” program can help.
More than 100 “House Then the Car” ambassadors have been identified and trained in 20 states to counsel and empower millennials and Gen Zs to pursue homeownership. They are located in major metro areas and are all licensed real estate professionals.
A number of budgeting and financial analysis tools are available on the “House Then the Car” website, including a FICO score estimator and a down payment resource locator.
In addition, potential homebuyers can take an online pre-purchase counseling course which can help participants learn if homeownership is right for them, how to buy a home and how to maintain a home.
The “House Then the Car” program, which is run by a team of eight committee members, clearly aligns with NAREB’s founding mission to promote housing democracy
According to Williams, NAREB members work collaboratively across all housing-related disciplines to establish fair housing for all. Founded in 1947, NAREB is the oldest minority professional trade association in America.
The “House Then the Car” campaign is part of a larger NAREB effort called the Two Million New Black Homeowner Program or 2MN5, that is working to close the 30-point gap in Black homeownership rates in the next five years.
NAREB’s 2020 State of Housing in Black America report cites a number of grim statistics highlighting the pressing need for such an initiative:
– The Black population in the U.S. is concentrated in major cities. Sixty-two percent of Blacks are concentrated in 20 MSAs. In 2019, 25.6 percent of the Black population resided in areas where the median house price is above that for the U.S.—$253,000.
– The homeownership rate for Blacks who graduated from college is only 3.2 percentage points higher than that of White high school dropouts.
– Black homeowners are less likely to have a college degree.
– Blacks have a higher share of owner households headed by women than any other category of owner households.
– Black borrowers pay significantly higher rates for FHA-backed loans, and higher rates for conventional mortgages.
– In 2018, 53 percent of Black mortgage borrowers obtained FHA or VA loans, compared to 23 percent of White borrowers.
– Only 5 percent of the conventional market were loans to Black borrowers, compared to 15 percent of the FHA/VA market.
– In 2019, 10 lenders were responsible for originating 24 percent of mortgage loans to Black borrowers. Of those 10, only three were traditional depository banks.
– Black applicants are more than twice as likely to have their loan applications rejected.
Key areas of focus and measurement include:
– Increasing homeownership in Black communities over five years.
– Increasing the size and scope of Black business in real estate.
– Strengthening the foundation of Black wealth through land ownership.
– Raising the awareness of the important role homeownership plays in wealth creation in the Black community.
– Transforming targeted neighborhoods in selected cities.
– Advocating for local, state and national legislative and regulatory reforms to promote democracy in housing that will help increase Black homeownership.
Despite the uphill battle in closing the homeownership gap, Williams remains fervently optimistic.
“There are solutions. There are public and private sector remedies,” he said. “NAREB continues to advocate and push the envelope by heightening awareness in all sectors that homeownership not only increases the wealth building capacity of Black Americans, but also serves to strengthen the nation’s and communities’ economic outlook.”
For more information, please visit housethenthecar.com.