How Can Black Millennials Take Part In Homeownership In 2023? 

How Can Black Millennials Take Part In Homeownership In 2023? 

The current recession is a daunting reality to face. The job market is shaky and layoffs are sweeping across various industries. Many of us are struggling to pay down student loans for financial relief, some are struggling to get by and pay rent, and we’re all staring at another recession. So what gives? Well, after a conversation with Brooklyn real estate broker and entrepreneur Tricia Lee Riley, a lot, actually. 

We’re in an official recession now, but nobody wants to talk about it. I guess they don’t feel good about the marketing around it. We’ve never had a recession before where tech companies are laying people off. So you know it’s bad,” said Riley. It’s going to be a few years before we really get stable again. It’s just a cyclical thing. Every industry is impacted.”

A lot of Black millennials are really scared by this. Many may not still know some of the basics of investing or even proper budgeting given the economy we were dealt out of college or just going into young adulthood. So I questioned Riley on what she’d honestly suggest Black millennials do right now if they haven’t started preparing for the recession and still want to be homeowners. 

Black millennials need to adapt changes to their personal budget. We never know when our individual industries will be affected. It’s about taking responsibility for your livelihood and your security,” she said. “There’s no such thing as job security, whether you work for yourself or you don’t. When we’re looking at shifts and changes in the economy, you must apply that to your own home. When I saw the rates were going up, which would impact the number of people who were buying homes, therefore impacting the number of people who were able to successfully sell homes, I prepared by cutting my entire salary by 20% and my  home budget by 25%, which entails what I allow myself to spend.” 

Riley continued: “I think where millennials get it wrong is that they understand what’s going on in the economy and they understand their money, but they’re not living well below their means when the time comes. There are just times in life when you need to live well below your means, which can still mean living well but also below your means. You can’t earn and spend. You can’t do that and plan for security. You have to sacrifice something for security.” 

I asked Riley for her thoughts on house hacking, especially for millennials in their 30s. 

“I don’t know why house hacking is overlooked so much. Whatever that looks like: Maybe it’s you and a roommate, or maybe it’s you moving in with your partner. It could even mean going to live with your parents for six months to restructure. Just don’t personalize these financial struggles when it’s a global concern.” 

That last line stood out, as so many of us in our 30s, and even some of us in our late 20s, feel like failures because we can’t live up to the life our parents had at our age or even to what we were expected to have at this point in our lives. 

“You want to say ‘I failed’ or ‘I didn’t do this right.’ But it’s not you! If the government can be in arrears, why do you think you’re supposed to be perfect? Come on,” Riley reasoned. “What it is, though, is being moldable and flexible as things change. And also being creative and having the judgment to not overextend yourself.”  

While I won’t point the blame solely at social media for many millennials and Gen Zers trying to “keep up with the Joneses,” I will acknowledge the effect it’s had on us. Overextension, as Riley labels it, is a trend many of us fell into. “Millennials don’t have to feel that since they may be making a certain amount they should be paying more. Nothing feels as good as security,” Riley says. “When we bought our home, there were homes that I wanted, but better than that, I wanted to know that if I wanted to take a client I could, and if I didn’t want to I wouldn’t have to.” 

Ironically, the pandemic affected Riley as soon as she bought her home. “I was in my home for seven days before the pandemic hit, and I couldn’t work for seven months. I didn’t earn a check for nine months. That’s when you realize how important it is to live for things that are true for you and not what impresses other people.” 

One aspect that came up was our cultural obsession with independence in the Black community and how it affects our daily lives and future finances. It still seems taboo, in a sense, to bring up, but the truth is that we’ve heard all too often of Black parents asking their kids to leave the house at 18 or 21, forcing many to figure life out without a head start. “I think culturally we are immensely tied to our independence and also defined by it. And that’s generational. There’s a level of immense pride in our ‘independence’ that is different culturally. I’ve been around to see how other cultures take a lot of pride in how well they set their children up to be successful when they become independent. They ideally want to see their kid come out of the house, maybe get married, and buy a house. Maybe rent for a year or two, but be positioned to now secure their own home and fully do ‘adulting.’” 

What we can afford versus what we can actually cover comes up, with Riley explaining that “there is something to be said about budgets and what’s realistic. Sometimes we do things that we can pay for but can’t really afford it. Being able to afford something means that if your hours were cut by 20% you’d still be comfortable. Being able to afford it means that you don’t have to wait until you get paid to take care of it. I think what we need to do in our culture is look at finances and budgeting and have more conversations around that. For instance, you should only be paying about 20% of your income on housing.” 

With the job market in a whirlwind of layoffs, the thought of holding off on purchasing a home for a few years plagues many Black millennials. However, there are some of us who do have the savings and income to purchase. I wanted to know firsthand what Riley thought of sitting tight on buying anything while the market does what it does.

“I don’t think sitting tight is always necessary, because homeownership is impacted by so many things. What you hear about the most are interest rates. But that doesn’t always impact every buyer. A lot of people can have preferred interest rates through their banking relationships and through their job’s banking relationships,” she explained.

When asked if having the funds for a down payment or the best credit was more important, she confidently responded, “Absolutely both. The credit is going to determine your loan terms, and that’s extremely important. If you don’t have good loan terms, you won’t be able to afford your purchase. For example, if I borrow $500,000 and I have great credit, and you borrow that much with only decent credit, our monthly payments and home insurance look very different. So now we may be living in the same house, but it’s costing you 25% more than me. And don’t forget your closing costs, either. Closing costs can run you 3% to 4% of the transaction.”

House hacking, serious budgeting, living well below our means, and remaining adaptable to the shifting economy is where Riley advises Black millennials to begin their homeownership dream — though not at the cost of our mental health. “Come down from where you think you need to be to where you are. Millennials have a habit of not giving themselves grace around finances, feeling that they need to be fully financially established to be legit. That’s not fair to them. It’s not fair to yourself, because things are always going to happen,” she says. “Things are going to come up. Nothing is ever set. That’s why grace is important. I feel like millennials just want to be where they want to be right away, and that’s just not how this works. You have to give yourself grace.”

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