A spike in home prices, which are rising at the fastest pace in 15 years, is creating new challenges for Black home buyers,
The Black homeownership rate – 42 percent – is at an all-time low across the U.S., Inman reported. The gap between white and Black homeownership is almost 30 percent — larger today than it was more than 50 years ago, CNBC reported.
In January, home prices reflected an 11.1 percent year-over-year gain. This was up from 10.2 percent in December 2020, according to the S&P CoreLogic Case-Shiller 20-city price index. Nationwide, home prices saw an 11.2 percent gain year-over-year in January, representing the highest gain in nearly 15 years, according to the broader S&P Corelogic Case-Shiller national price index, Market Watch reported.
The home price spike will make for new challenges for Black home buyers.
Here are five things for Black America to know.
Home prices increased monthly in 19 of the 20 large cities tracked by Case-Shiller. Cleveland was the only city to see prices drop. Phoenix saw the highest rate of price appreciation with a 15.8 percent gain year-over-year, followed by Seattle and San Diego.
“January’s data remain consistent with the view that covid has encouraged potential buyers to move from urban apartments to suburban homes,” said Craig Lazzara, managing director and global head of index investment strategy at S&P DJI, in the report.
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Mortgage rates in 2020 have risen more than half a percentage point, and went above 3 percent for the first time since last summer, Market Watch reported.
A rise in mortgage rates will hit Black America hard. For example, in Detroit, where 78.3 percent of the population is Black, less than a quarter of home purchases in 2019 were financed by mortgages. A majority of those mortgages went to white homebuyers, according to the Wall Street Journal podcast episode, “Why It’s Hard to Buy a House in Detroit, Especially if You’re Black.”
Black households – 43 percent – are more than twice as likely as white households – 21 percent – to carry student loan debt, The National Association of Realtors (NAR) reported. Black households hold a median student loan debt of $40,000 compared to $30,000 for white households.
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Black homebuyer applicants were rejected for mortgage loans at a rate 2.5 times greater than white applicants – 10 percent versus 4 percent, respectively, the National Association of Realtors reported.
Homes seem out of reach financially for many Black families. Just 43 percent of Black households can afford to buy the typical home compared to 63 percent of white households, according to a National Association of Realtors recent report, Snapshot of Race & Home Buying in America,