Report: Luxury Home Sales in Markets North of NYC Increased by Double Digits in the Third Quarter
The growing number of closed sales is concentrated in the lower end of the luxury market.
WASHINGTON—Minority homeownership continues to stubbornly lag behind the national rate, with Black Americans facing some of the toughest hurdles to achieving this essential part of the American Dream, according to a report released recently by the National Association of Realtors.
The homeownership rate for Black Americans—42%—is nearly 30% less than the rate for white Americans at 69.8%. The U.S. homeownership rate stands at 64.2%, with the rates for Asian and Hispanic Americans at 60.7% and 48.1%, respectively.
The NAR report states that the Black homeownership rate in New York State is 31%, while the homeownership rate for white Americans in New York is 63%. The disparity is wide as well in surrounding states. For example. in Connecticut the Black homeownership rate as compared to whites is 71% to 40%, while in New Jersey the rate differential is 70% to 38%.
NAR’s “Snapshot of Race & Home Buying in America” report examines the homeownership rate among each race in 2019 using American Community Survey data by state and the changes in the homeownership rate by race from 2009 to 2019. Using the Profile of Home Buyers and Sellers data from 2020, the report looks into the characteristics of who purchases homes, why they purchase, what they purchase, and the financial background for buyers based on race.
“This data reinforces the need to implement key policy initiatives NAR developed in concert with the Urban Institute and the National Association of Real Estate Brokers to address the Black homeownership gap,” said NAR President Charlie Oppler, a Realtor from Franklin Lakes, NJ, and the CEO of Prominent Properties Sotheby’s International Realty. “Specifically, this five-point plan developed in 2019 calls on the nation to: advance policy solutions at the local level; tackle housing supply constraints and affordability; promote an equitable and accessible housing finance system; provide further outreach and counseling initiatives for renters and mortgage-ready millennials; and focus on sustainable homeownership and preservation initiatives.”
Regarding home affordability nationwide, 43% of Black households can afford to buy the typical home compared to 63% of white households, 71% of Asian households and 54% of Hispanic households, according to the study. Wide variances in affordability exist by state, NAR reported.
For example, more than 60% of Black households can afford to buy a home in Alaska, Kansas, Nebraska, South Dakota, and Vermont. However, less than a third of Black households can afford to purchase a home in California, Colorado, Hawaii, Massachusetts, Montana, Nevada, Oregon, Utah, Washington state, Wyoming and the District of Columbia. There are only four states where less than half of white households can afford to buy a home: California, Hawaii, Oregon and Washington state. More than half of Asian households can afford to purchase a home in all but six states – California, Colorado, Hawaii, Montana, North Dakota, Wyoming – and the District of Columbia.
Nearly a quarter of Asian Americans—23%—and one in five Hispanic Americans—18%—purchased a multi-generational home, with “spending time with aging parents” and “saving money” listed as the primary reasons for those decisions. Fifteen percent of Black Americans and 10% of white Americans bought a multi-generational home as both segments said a top driver was adult children or relatives moving back into the home. Black and Asian Americans were more likely to say that “wanting a larger home that multiple incomes could afford together” was an important reason for buying a multi-generational home.
Black households are more than twice as likely than white households to have student loan debt—43% vs. 21%—with a median student loan debt for Black households of $40,000 compared to $30,000 for white households. For home buyers with student debt, it is one of the major hurdles for saving for a down payment. Black applicants were rejected for mortgage loans at a rate 2.5 times greater than white applicants—10% vs. 4%, respectively, the NAR report stated.
Black Americans and Hispanic Americans—15% and 10%—were three and two times as likely, respectively, than white and Asian Americans—5% each—to tap into their 401(k) or pension funds as a down payment source for a home purchase. Conversely, almost four out of 10 white Americans—37%—used the funds from the sale of their primary residence to serve as a down payment for a home compared to only 21% of Hispanic, 18% of Asian and 17% of Black Americans.
“The residential housing market’s strong performance during the pandemic helped homeowners enjoy a significant increase in wealth via approximately $1 trillion in additional home equity over the last year,” said NAR Chief Economist Lawrence Yun. “However, as indicative of the K-shaped economic recovery, greater numbers of potential first-time homebuyers—many of whom are minorities—are feeling discouraged by disproportionate job losses. Essentially, they’re being priced out of owning a home because of rapidly rising home prices resulting from historically-low housing inventory. For Black Americans, in general, the greater likelihood of having student loan debt, combined with lower household incomes and accrued savings when compared to the national average, adds to the challenge.”
NAR believes policy proposals such as the Biden administration’s first-time buyer tax credit of up to $15,000 would help address many of these underlying problems. Under the proposal, home buyers would receive the tax credit when making the home purchase, rather than having to wait until filing federal income taxes the following year. NAR also believes the first-time buyer tax credit should be accompanied with incentives to create more affordable housing units to prevent the credit from further aggravating the current shortage.
The study noted that for those who said they witnessed or experienced discrimination in a real estate transaction, 41% of Black respondents said they face stricter requirements because of their race. That compares to 27% of Asian respondents, 19% of Hispanic respondents and 16% white respondents. Approximately one-third of Black homebuyers and a quarter of Asian homebuyers said they witnessed or experienced discrimination with the type of loan product offered.
Approximately seven in 10 white Americans said they purchased a home in a neighborhood where the majority of the residents were of the same race. However, only about a quarter of Black, Hispanic and Asian Americans said the same.
NAR officials stated the association is working to ensure Realtors are active leaders in the fight against bias and discrimination. Last year, NAR began implementing its fair housing “ACT” plan, which emphasizes Accountability, Culture Change, and Training. As a part of this plan, NAR released a new interactive training platform—Fairhaven—designed to help combat discrimination in America’s real estate market. In addition, NAR developed an implicit bias training video with strategies to help Realtors override biases in their daily interactions.
To access the full “Snapshot of Race & Home Buying in America” report go to: https://cdn.nar.realtor/sites/default/files/documents/2021-snapshot-of-race-and-home-buyers-in-america-02-18-2021.pdf
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