The U.S. housing market has never been harder for first-time homebuyers of all backgrounds, but Black buyers are facing the biggest challenges.
The housing market is more competitive than ever due to record-high home prices and skyrocketing mortgage rates. These factors are making it harder for Black Americans to achieve the American dream, keeping them out of the most tried and true way of building wealth in America.
CNN reports Black Americans are already behind the 8-ball when it comes to purchasing a home. They’re less likely to come from wealthy families, more likely to carry debt and typically pay higher rents while saving up for a down payment. They’re also denied home loans at much higher rates than other races.
According to Zillow, nearly 20% of Black applicants were denied a mortgage in 2020, double the percentage of White applicants. The most common reason for denying Black applicants given was credit history.
“It was very defeating, very discouraging,” Nicosha Jones told CNN of her experience purchasing a home. “That’s the American dream. Once you buy a home, you feel that you’re accomplished.”
The Biden Administration is trying to help, releasing an action plan to boost affordable housing that includes expanding and improving federal financing and ensuring more government-owned homes and other housing goes to owners who live in them. However, officials say it will take five years to ease the housing supply shortage.
As of right now, investors are making cash offers for homes to rent or flip. Business Insider reports investors spent $50 billion on homes in the fourth quarter of 2021, particularly in the South. Even mobile homes are now in high demand.
Many housing experts believe these issues will only widen the homeownership and wealth gaps. Additionally, skyrocketing rents are displacing more Americans today than ever before including in rural areas.
“The market is definitely speeding up gentrification,” Andre Perry, a senior fellow at the Brookings Institution told CNN. “What that really means is that people are going to be pushed out to low-wealth, low-resource suburbs. That people are going to be farther away from their jobs, and families will struggle.”