New program puts Black real estate agents at forefront

The National Association of Real Estate Brokers and HomeLight has announced the creation of its “Black Real Estate Agent” program to provide financial, educational, and career support for aspiring Black real estate agents.

HomeLight is partnering with NAREB in this venture with the goal of ultimately improving the rate of homeownership for Black Americans across the country, according to Antoine Thompson, NAREB national executive director.

Black Americans represent less than 6% of all real estate professionals in the U.S., according to the Census Bureau.

“This initiative works to close the income and racial wealth gap in the industry,” Thompson said. “Together we’re holding open the door that would otherwise remain closed to Black professionals and consumers.”

Homeownership rates for Black Americans dipped to 44.1% in the fourth quarter of 2020. That’s despite an overall rise of 0.7% in homeownership in the fourth quarter of 2020.

As part of the Black Real Estate Agent program, HomeLight and NAREB will help cover up to $5,000 of the onboarding costs for new agents, including pre-licensing classes, agent exams and select marketing and technology needs. Each program participant will be paired with an experienced NAREB real estate counselor who will serve as a mentor and advisor.

The NAREB is seeking applicants in the United States who are between the ages of 18 and 35, are interested in a career in real estate but not currently established as an agent, willing to work with a NAREB broker during at least their first year in real estate, and committed to spending five to 10 hours per week working with mentors or on continuing education.

NAREB President Lydia Pope said “democracy in housing” cannot be reached without an increase of Black real estate professionals.

“Agents are the frontline and introduce homeownership to prospective clients,” Pope said. “We are confident that this new program will not only equip Black American program participants with the knowledge and practical experience to become top producers in their communities, but also significantly expand Black homeownership in their communities.” 

Black homeownership rate was the only demographic to decline year-over-year, according to the Census Bureau. White Americans increased homeownership in the fourth quarter to 74.5% – a nine-year high. Hispanic-American homeownership rose to its highest rate in three years, at 49.1% last quarter. Asian, Native, Hawaiian, and Pacific Islander homeownership was reported at 59.5% – up from the rate of 57.6% in the fourth quarter of 2019.

A report by Morgan Stanley showed that equalizing Black-White homeownership rates over the next 10 years would create more than 5 million more homeowners of color, generate nearly 800,000 new long-term jobs, and raise up to $400 million in additional tax revenues relative to current trends.

“Our goal is to drive sustainable, structural change by increasing access to job opportunities as well as education around how systematic racism has impacted the real estate industry,” said Sumant Sridharan, HomeLight COO. “We’re excited to partner with NAREB to offer this program to aspiring Black real estate professionals. Together, we believe we can fundamentally shift diversity and equality in our industry by increasing access to training, education, and support for Black real estate agents.”

Source: housingwire.com

White homeownership rate hits nine-year high

Despite an unrelenting COVID-19 virus and economic recession, U.S. homeownership rose in the fourth quarter of 2020 from the same period last year. And it’s reached a record high for white homeowners, but fallen for Black Americans.

The overall homeownership rate in the fourth quarter of 2020 rose 0.7% above that of the fourth quarter of 2019, according to a new report from the U.S. Census Bureau. The share of Americans who own their own home was 65.8% in the fourth quarter of 2020, rising from 65.1% in the same period a year earlier, the Department said in a report on Tuesday.

That percentage is a drop, however, from the third quarter of 2020, which reported a robust 67.4% homeownership.

The homeownership rate for white Americans in the fourth quarter of last year was 74.5% – a nine-year high, and surpassing the fourth quarter of 2019’s rate of 73.7%. Homeownership rates for Black Americans dipped to 44.1%, the lowest rate since the first quarter of 2020.

Hispanic-American homeownership rose to its highest fourth quarter rate in three years, at 49.1%. Asian, Native, Hawaiian, and Pacific Islander homeownership was reported at 59.5% – up from the rate of 57.6% in the fourth quarter of 2019.


Making housing more affordable by bridging the affordable supply gap

In the last few years, the number of existing single-family homes for sale has decreased. But home prices have increased. To make homeownership a possibility for everyone, there needs to be a higher supply of affordable homes.

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Homeownership in Q4 2020 was highest in the Midwest – about 70.8%, according to the report. The South (67.7%), Northeast (62.6%), and West (60.4%) all reported homeownership rates above 60%, as well. All regions had higher fourth-quarter homeowner rates than in 2019.

The median asking sales price for vacant, for-sale units was $214,600 in the fourth quarter of 2020.

The average U.S. rate for a 30-year fixed mortgage fell to under 2.8% in the fourth quarter, which pushed up home purchases (though a lack of inventory and rising prices have hindered even higher rates of home ownership).

Approximately 89.1% of all housing units were occupied in the fourth quarter of 2020, and 10.9% were vacant. Owner-occupied housing units made up 58.6% of total housing units.

Owners over the age of 65 made up the majority of homeowners in the fourth quarter of 2020 at 80.2%. The under-35 crowd accounted for only 38.5% of homeowners.

It’s conceivable that the total number homeowners increases in the next few years, as well. President Joe Biden is hoping to pass a bill green-lighting a $15,000 tax credit for first-time homebuyers. If the bill is passed, those first-time potential buyers could use the $15,000 essentially as a down payment on the home.

This looms as a solution to prospective buyers looking to take advantage of historically-low mortgage rates brought on by the pandemic and recession.

Source: housingwire.com

Majority of Home Buyers Expected to be Hispanics, African-Americans, and Other Minorities

A very significant change in homebuyer demographics is expected during the next 20 years. Will it also have a significant effect on home values? The January 2021 Urban Institute report (The Future of Headship and Homeownership) finds:

Net growth in the number of homeowners from 2020 to 2040 will be entirely among people of color, especially Hispanic homeowners. Between 2020 and 2040, there will be 6.9 million net new homeowner households, a 9 percent increase. Hispanic homeowners will grow by 4.8 million, homeowners of other races (mostly Asian homeowners) will grow by 2.7 million, and Black homeowners will grow by 1.2 million. The total number of white homeowners will decline by 1.8 million.”

Latin Americans

If this proves to be true, it will require changes for the entire residential real estate industry. Just to begin with, what implications will it have for future home values? Many studies conducted over the past several decades continue to show that neighborhood racial composition still drives unequal home values. Many laws have been in effect for over 50 years that prohibit real estate professionals from explicitly using race when evaluating a property’s value. But change has been very slow.

Appraisers continued to value homes in white neighborhoods as worth more than similar homes in Black and Latino communities. Research shows that since 1980, in similar social-economic neighborhoods, dominantly white home values have appreciated an average of $200,000 more than in neighborhoods of color. If this continues, home value appreciation will be suppressed as white homeownership declines and minority ownership increases.

One fact supporting the probability that Hispanic homeownership will increase is that the Department of Housing and Urban Development (HUD) announced in January that it is extending eligibility for FHA mortgages to immigrants under the Deferred Action for Childhood Arrivals (DACA) program. This means that “Dreamers” who are legally permitted to work in the U.S., are now eligible to apply for FHA-backed mortgages. Dreamers make up the age demographic most active in home purchases. DACA participants include undocumented immigrants that arrived in the U.S. before their 16th birthday and were less than 31 years old when the program was established on June 15, 2012. In addition to 4.8 million new homeowners, the number of Hispanic rental households is expected to increase by 3.8 million.

More changes will be needed in the real estate lending industry. According to a MarketWatch analysis of Home Mortgage Disclosure Act data, African-Americans make up 13% of the country’s population, but they only received 6% of the mortgages that were originated in 2016. Furthermore, as a result of the Great Depression, lending requirements became much more stringent and that disproportionately causes even fewer black and Latino mortgage applicants to be approved. Less access to loans is likely to further obstruct price increases.

Homeownership trends, demographics, and lending policies are at a crossroads. Without meaningful change, the long steep climb in home value appreciation can be expected to slow significantly. As the largest asset owned by the vast majority of Americans, this endangers wealth accumulation.

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Also, our weekly Ask Brian column welcomes questions from readers of all experience levels with residential real estate. Please email your questions, inquiries, or article ideas to askbrian@realtybiznews.com.

Author bio: Brian Kline has been investing in real estate for more than 35 years and writing about real estate investing for 12 years. He also draws upon 30 plus years of business experience including 12 years as a manager at Boeing Aircraft Company. Brian currently lives at Lake Cushman, Washington. A vacation destination, near a national and the Pacific Ocean.

Source: realtybiznews.com

Hispanic households to grow the most over next 20 years

In a release on Thursday, the Urban Institute projected the future headship rate — the share of adults who are the heads of households — and the homeownership rate — the share of household heads who own their homes — through 2040.

Per Laurie Goodman, Urban Institute vice president of housing finance policy, policymakers and thought leaders need to understand the trajectory of the homeownership rate — where it has been, where it is going, who it has benefitted, and who it has left behind.

The analysis found that household growth will be weak over the next two decades. After a 7.3 million average growth from 2010 through 2020, UI projects 8.5 million in growth from 2020 through 2030 and 7.6 million in growth from 2030 to 2040.

“This decline is the result of slowing U.S population growth and lower headship rates for most age groups,” Goodman said.

They also project that all of household net growth will be from households of color, and a majority of that growth, in turn, will be from senior citizens.


Here’s how to find property owners ready to sell

In today’s low-inventory environment, complicated by external factors such as forbearance and foreclosure moratoriums, it’s crucial for real estate agents and brokers to be proactive in order to grow their business.

Presented by: PopStream

Between 2020 and 2040, Hispanic households will grow by 8.6 million, households of other races (mostly Asian households) will grow by 4.8 million, and Black households will grow by 3.4 million. White households will decline by 0.6 million. Of the projected 16.1 million net new households formed in those 20 years, 13.8 million will be headed by someone over 65.

However, the homeownership rate will also continue to fall for every age group.

“People who were 25 to 44 years old in 2010 are the most affected age group, as the Great Financial Crisis hindered their ability to become or remain owners,” Goodman said. “The aging of the U.S. population will cushion the drop in the overall homeownership rate because older households have higher homeownership rates.”

In all, Goodman projects the overall homeownership rate will fall from 65% in 2020 to 62% by 2040.

Specifically, the Urban Institute projects the decline in the homeownership rate will be particularly pronounced for Black households headed by 45-to 74-year-olds. 

“If current policies stay the same, the Black homeownership rate will fall well below the rate of previous generations at the same age and result in an unprecedented number of Black renters over 65,” Goodman said. “We project elderly Black renters will more than double from 1.3 million in 2020 to 2.6 million in 2040.”

Between 2020 and 2040, there will be 6.9 million net new homeowner households, a 9% increase, per UI. Hispanic homeowners will grow by 4.8 million, homeowners of other races (mostly Asian homeowners) will grow by 2.7 million, and Black homeowners will grow by 1.2 million. The total number of white homeowners will decline by 1.8 million.

Finally, renter growth will be more than twice the pace of homeowner growth from 2020 to 2040. In the 20 year span, there will be 9.3 million net new renter households, a 21% increase, per the report. Hispanic renters will grow by 3.8 million, Black renters by 2.2 million, renters of other unspecified races (including Asian renters) by 2.1 million, and white renters by 1.2 million. 

Goodman said UI is already focusing on policies directly impacting seniors citizens and the racial homeownership gap.

“To prepare for the surge in renters and coming demographic changes, we need to increase the supply of affordable homes and better tailor these homes to the needs of future owners and renters through more flexible zoning and land use regulations,” she said.

“To decrease the enormous racial homeownership gap, we need to take concerted action to improve and expand financial education and homeownership preparation, and increase the visibility, access, and types of down payment assistance programs.”

Goodman added that re-examining the qualifications for borrowers for mortgages and revamping the process to more precisely assess creditworthiness will also decrease the racial homeownership gap.

“We need to implement programs that sustain homeownership for borrowers with less wealth — especially people of color,” she said.

Source: housingwire.com