The percentage of black homeowners saw an annual decrease of one percentage point in the second quarter of 2019, according to the latest report issued by the National Association of Real Estate Brokers (NAREB).

In fact, the 40.6 percent homeownership rate in the second quarter was three-tenths of a percent lower than it was when the federal Fair Housing Act was signed in 1968. The finding is one of many contained in the 2019 State of Housing in Black America report, commissioned by NAREB.

The report results have caught the attention of the Chicago chapter of NAREB, including Courtney Jones, Dearborn REALTIST® president.

“With the black homeownership rate at about 42 percent, the Dearborn REALTIST® Board is committed more than ever to fight for wealth building through homeownership in our communities,” said Jones. “This includes tackling issues to encourage an increase in lending and educating all on housing programs, such as down payment assistance, alternative credit and financial literacy. Also, we are aligning with strategic partnerships and legislators across the state and country to further spread our mission and initiatives.”

Jones says he welcomes anyone willing to assist in meeting the goal of increasing black homeownership.

The 2019 black homeownership rate is 7 percent below its recorded peak of 49.1 percent in 2004, the report states. Also, the 2019 rate shows a 32.5 percentage point gap between blacks and non-Hispanic white homeowners.

NAREB drew the findings from the federal home finance database. Here are a few observations from the report:

  • In 2017 and 2016, the overall loan denial rates for home-purchase loans for black consumers (18 percent) was more than double of non-Hispanic white applicants (9 percent).
  • Debt-to-income ratios and credit histories were the top reasons for loan denials.
  • From 2016 to 2017, conventional loan originations and applications for black prospective homeowners increased 40 percent.
  • Higher fees and interest rates unfairly restrain potential gains in black homeownership, diminish the wealth black households achieve from homeownership and increase the likelihood of default.
  • In Chicago, segregation remains extremely high and continuing segregated living patterns forms an important backdrop for assessing mortgage market performance.

NAREB shares ideas to improve black homeownership

The report suggests improving black homeownership in three key areas:

  • Boost the number of loan applications,
  • Increase loan originations and
  • Improve homeownership sustainability.

Additionally, government sponsored enterprises should be empowered to develop innovative loans that better meet the needs of lower- and moderate-income borrowers and applicants who have less savings for a down payment, says NAREB.

To address pricing by the government sponsored enterprises, NAREB recommends:

  • Ensure that pricing adequately covers expected loan losses without overcharging consumers;
  • Return to a pre-recession practice of pricing based on pooling of risk; and
  • Require the use of credit scores that most accurately gauge the creditworthiness of black borrowers.