Black unemployment hit an all-time low last year. Despite this encouraging sign, the wealth gap between white and black Americans remains discouragingly high. In 2022, the median wealth for black households was about $44,900, compared to $285,000 for white households.
One reason for this is the disparity in home ownership between black and white families, with homes accounting for the bulk of personal wealth. Black families have a homeownership rate of about 45%, while white families have a homeownership rate of nearly 75%.
“If the cost of compliance is too high, banks will again cut growth below that threshold.”
The National Association of Real Estate Brokers (NAREB), a network of Black real estate professionals, recently released its 10th Annual Housing Status of Black Americans (SHIBA) Report. NAREB President Courtney Rose Johnson told The Scotsman Guide that her group's efforts, including the report and an event in 100 cities on April 13 to highlight the potential for black homeownership, He talked about the Black Wealth Building Tour.
Black homeownership rates were nearly 50% before the Great Recession. Will this record be surpassed in the near future?
It's definitely possible, but you'll have to change a few things. First, there is a huge shortage of housing inventory. Finding buyers for affordable homes is a challenge. Second, we need to further improve education and financial literacy. SHIBA's reports continue to show that there are more than 2 million black potential home buyers ready to take out a mortgage. Why didn't they buy? Down payment? Don't they know they are ready for a mortgage?
Federal policy created this situation, and you're asking federal policy to fix it. What do you expect to happen?
We all know that a lot of discrimination was basically done by policy. So we're calling on Fannie Mae and Freddie Mac, for example, to overhaul their pricing grids and move to more accurate and up-to-date credit scoring models. Using only one type of credit scoring model is not necessarily advantageous for Black and brown borrowers. When looking at the average African American, the comparison between VantageScore and FICO is usually higher due to several features that VantageScore uses.
There are many things the federal government can do to increase housing stock. How are cities leveraging community development block grants? Can some of the regulations, zoning, and building requirements in certain cities be made more flexible? There are many things that can happen from the government side. will make homeownership more achievable for us.
Are you surprised that housing issues aren't talked about more in an election year?
Housing affects everyone. As prices rise across the country, the conversation about affordable housing is not just for low- to moderate-income families. I prefer the term “workforce housing.” This means that teachers, firefighters, police officers, and other people who go to work every day can buy a home in their price range. Housing production, interest rates, all of these things impact not just black and brown communities, but entire communities around the world.
Another worrying issue is the number of homes being purchased by black renters who are vulnerable to the effects of climate change.
This is the second year in a row that we are covering this issue. The report includes maps showing that the country's black population is concentrated in densely populated areas such as the South and Northeast. The same area is along the coastline and is susceptible to flooding. So that's something we're very conscious of as we push for increased homeownership. We also focus on housing preservation, ensuring Black homeowners are able to support themselves in a time of global warming and increasing environmental issues.
What are your hopes for the future?
We launched the NAREB Building Black Wealth Tour in response to the black housing situation in America. We also launched the NAREB Black Developers Academy to help our members, who are real estate developers, scale up and increase production to address the housing shortage. We're excited to see Black consumers coming forward for information on how to become homeowners. ●
