Black and Latino homeownership increased from 2019 to 2021 after years of decline following the Great Recession, according to recent Census Bureau data.
But those gains could be threatened as rising mortgage rates are pricing many first-time homebuyers out of the market.
Data from the Census Bureau’s 2021 American Community Survey analyzed by the Urban Institute shows that Latino homeownership rates increased by 2.5 percent while the rate for the Black community rose by 2 percent over the two-year period.
Homeownership rates for both groups climbed in most states as people reached their prime homebuying years. The median ages for Black and Latinos were 35.3 and 30.5, respectively.
And some states, including Arizona, Idaho, Iowa, Minnesota, North Dakota and Utah, experienced surprising increases, the analysis showed.
Meanwhile, homeownership rates jumped despite the pandemic’s negative effects. This was partly due to low mortgage rates for those entering the market and mortgage forbearance, which allowed a pause on mortgage payments during the pandemic.
Now market conditions are changing quickly and mortgage rates are surging, making monthly payments unaffordable for many first-time buyers.
The Federal Reserve’s fight with growing inflation has rates hovering near 7 percent after a series of interest rate hikes beginning in March, when mortgage rates were around 4 percent. And experts expect rates to rise following the latest rate increase.
Yet the mortgage rate increases have not affected Americans equally, according to Nadia Evangelou, senior economist and director of forecasting at the National Association of Realtors (NAR).
“With 7% mortgage rates, only 15% of Black households can currently afford to buy the typical home compared to 30% of White households. Thus, Black families may fall further behind in homeownership compared to their White counterparts,” Evangelou said in a statement late last month.
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Separate NAR data released last week revealed that housing affordability issues hit Black Americans especially hard in a 12-month period ending in July 2022, with Black homebuyers making up just 3 percent of the market.
Jessica Lautz, NAR vice president of demographics and behavioral insights, previously explained to The Hill that Black Americans put a disproportionate amount of their income into rents, making it difficult to save for a home.
“And so, when we’re seeing these rental costs rise at the pace that they are, it’s quite impossible for Black homebuyers to be able to enter into the marketplace,” she said. “And that just means lost wealth gains over time both for Black Americans and also for first time homebuyers overall.”
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