Home Ownership Access for Minorities - What will it take to turn things around?

April 29, 2014

When the first African-American President was elected into Office, many thought that the change that they had long hoped for would be felt not long after. But in 2009, the Great Financial Crisis left the U.S. in shock with the collapse of large financial institutions, the bursting of the housing bubble and declines in overall consumer wealth. The crisis also played a significant role in the housing market which suffered a huge blow. Less than five years after the financial crisis, many are still crawling out of their losses. Unfortunately, not all groups are recovering the same way as others.

Regardless of race or ethnic origin, owning a home is the American dream. But while the goal is shared equally across races, home ownership is radically different among groups in the Unites States. This blog examines the recent trends in access to home ownership, employment, annual household income and experience when seeking mortgage when buying a home as a minority.

Despite the favorable markets conditions after the great financial crisis, minorities are still crawling towards positive employment and home ownership rates. A closer inspection at the numbers suggests that the African Americans and Hispanics are in an economic crisis and cannot compete in this market. I am calling it an economic crisis because of the gap between white Americans and minorities in annual income, percentage of homeownership and unemployment is too large for the 21st century.

Before looking at home ownership rates, let's look at the resources and financial capacity among the different groups. Looking at the annual income of a household can explain a majority of the findings and different outcomes by ethnicity. Appendix 1 shows that the African Americans and Hispanics have a lower average income compared to Asians and whites. The level of income makes a significant difference in the ability to qualify for a home and would impact homeownership rates. The lower the average income, the harder it is to come up with the amount needed for a down payment, as seen in Appendix 2.

Appendix 3 shows homeownership rates among the different ethnic groups with African Americans having the lowest percentage of home ownership. Mortgage denial rates, as shown in Appendix 4, have a direct effect on home ownership rates as African Americans are much more likely to be denied a mortgage application among all other races.

The financial crisis in 2008-2009 is a result of home values reaching their peak then collapsing. Behind every housing bubble or boom is a bust or doom. Two years after the values of homes collapsed, recovery is underway in many markets. Unfortunately, not all groups are experiencing the housing boom in the same way as seen in Appendix 5.

Appendix 6 shows unemployment rates according to ethnicity with the African Americans experiencing the highest percentage of unemployment. This also has a direct effect on the rates in home ownership as well. The African American Community is in an economic crisis of epic proportion. What will it take to turn things around? Your feed back would be appreciated.

Appendices

Appendix 1: Annual Household Income