Black buyers are being squeezed out of the hot housing market Business

Nicosha Jones spent almost a year trying to buy his first home.

The 48-year-old Jones planned to build capital by buying a home in the South Phoenix neighborhood where she grew up. Instead, she is on the sidelines, facing rapidly rising rents and struggling to restart the process of finding her own place.

“It was very devastating, very reluctant,” Jones said. “It’s an American dream. Once you buy a house, you feel like you’ve done it.”

Buying a home has never been so competitive or expensive for American families, with record high house prices, and now mortgage rates are rising rapidly, still well above 5%. According to Freddie Mack, the typical monthly mortgage payment for purchased property has increased by more than 30% over last year.

The market sets prices for home buyers who first bought a home, of any origin, but black buyers face even greater obstacles.

Studies show that black homebuyers are less likely to come from wealthy families, are more likely to have debts and pay disproportionately higher rents, making it difficult to save on down payments.

Black applicants were denied home loans at a much higher rate than other groups, according to an analysis of Zillow data from the Mortgage Disclosure Act. Almost 20% of black applicants received a mortgage waiver in 2020 compared to 10% of white applicants. Credit history was the most common reason for denial to black applicants.

This week, the Biden administration released an action plan to increase the supply of affordable housing and reduce the housing shortage in the United States. Officials say it should ease the housing shortage in five years.

But there are currently several programs to help Jones and other potential buyers who can hardly afford housing.

This creates a huge obstacle in the current hot housing market, where investors with cash offers are buying more than ever, property for rent or coup. Investors bought a record 18.4% of homes in the U.S. purchased in the last quarter of 2021, compared to 12.6% a year earlier, according to an analysis of Redfin county records.

Phoenix is ​​particularly active investors who acquire 28.4% of real estate over the same period.

Jones spent almost a year trying to buy his first home there. She began to save money and received a loan from the FHA, which will require a reduction of only 3.5%. But with a down payment of less than $ 6,000, Jones failed to compete and eventually dropped the search.

“Every time I made an offer, every time I went to look at something, I exceeded the price, or someone had already grabbed it,” Jones said. “I just put it in the background because I can’t afford what I have now.”

Masha Fair, a Jones realtor, says many of her clients in Phoenix face an equally difficult situation.

“They can’t buy anymore. They’re stuck in the rental market,” Fair said. – And those who live here hurt.

Some experts expect that these market conditions will increase the gap in home ownership.

Census data show that nearly 45% of black families have their own home, compared to 74% of white families. The gap has hardly changed since the 1960s, when the Fair Housing Act banned discrimination against housing.

“Unfortunately, the gap in home ownership has actually widened,” said Jessica Lotz, vice president of demography and behavior for the National Association of Realtors. “The pandemic has made things worse. If we look at inequality in home ownership, we see that black homebuyers are finding it harder to enter the home buying market because they have been hit harder by the pandemic.”

Property ownership is a staple for families to build wealth, and it has never been more valuable. As of 2019, the average white family had 7.8 times more wealth than the typical black family, according to Hamilton’s economic policy initiative at the Brookings Institution.

“The housing gap will exacerbate the wealth gap,” said Andre Perry, a senior fellow at the Brookings Institution. “When people don’t buy houses, it just makes it difficult for future generations to buy houses … If we ignore wealth, we are essentially burying our heads in the sand against discrimination and barriers that hinder many people, even high-income people. buying a home. “

Rising rental costs could further widen the gap in racial wealth and displace more people.

Rents in the US reached a new record in April and are expected to continue to rise. The average rent in the country was 1,827 dollars a month, which is 16.7% more than a year ago, according to a report from

“The market is definitely accelerating gentrification,” Perry said. “It actually means that people will be pushed into suburbs with low affluence and low resources. That people will be away from their jobs and families will struggle.

In Phoenix, realtor Masha Fair says investors are not just buying real estate – they are renting so high that families are being forced to relocate.

“They can no longer live in a neighborhood where they know their neighbors,” Fair said. “The same investors who come and buy these houses in cash are now renting them out to the same people who wanted to buy a house,” Fair said.

Jones’ rent in Phoenix grew by $ 400 a month. She burned $ 6,000, which she set aside for the down payment, losing her job for several months. She is now much more focused on making ends meet than on making her dream of home ownership a reality.

“It’s all money … I can’t even afford to live there,” Jones said. “Yeah, it hurts.”

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