There’s a pandemic real estate boom right now, but black buyers are going missing
Despite the nationwide increase in homeownership, the home buying rate for blacks has changed very little over the past 20 years, according to a recent study. And the pandemic housing boom hasn’t really changed that.
Between April and July of last year, 82% of Americans who bought a home were white, according to a study by the National Association of Realtors. Only 5 percent were black.
Black American homebuyers made up only 6% of homebuyers in 2021. Reasons for this low number include high debt held by black Americans, lower credit scores, and a lower ability to receive help from. family, concludes a recently released NAR report.
Low interest rates, but higher house prices
Although mortgage interest rates are currently low, high debt has kept potential black buyers from getting loans. The average mortgage interest rate is currently 3.2 percent for a 30-year fixed-rate mortgage, according to Bankrate.com. At the time of going to press, the median home price was nearly $ 354,000, a 13.1% increase from October 2020, according to NAR.
Potential buyers with a high debt-to-income ratio are limited in the type of mortgage to which they are entitled. Each $ 10,000 of debt adds $ 50 to $ 100 to the monthly debt-to-income calculation of the applicant. The higher the debt, the more your purchasing power can be reduced and in some cases this could decrease the likelihood of even being approved for a loan.
The Urban Institute also found that only 20 percent of black households have a credit score above 700, compared to 50 percent of white households. A person’s credit score plays a huge role in the mortgage rate and your monthly payment plan. The higher the credit score, the lower the interest rate and monthly payments; the lower the credit score, the higher the interest rate and the higher the monthly payments.
In addition to being heavily in debt, potential black homebuyers have found themselves overpriced in the highly competitive housing market.
San Diego-based Everett Benyard, 30, was looking to buy his first home earlier this year. But the prison officer struggled to buy a house in one of the hottest real estate markets in the country. The median price of single-family homes in San Diego hit $ 860,000 in July, according to the California Association of Realtors.
“I was just outbidding, outbidding big,” Benyard told CNN Business. “I went and saw a lot of different places. … I would go see something and the next day it would be off the market.
The Benyard problem is a challenge that many black homebuyers face: limited funds competing with homebuyers with deeper pockets.
Read the full article on Finurah here.
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