The Trump Administration policies made homeownership a reality and rents reasonable for many Americans. Low inflation, low mortgage rates, and lower cost of goods made housing affordable even for ethnic groups. During the Obama Administration, racial homeownership ticked down, but from 2017 to 2021 it began to increase among Blacks, Latinos, and Asians. A homeownership gap between whites and the ethnic groups has always existed and must be addressed, but the policies of the current administration that made homeownership less affordable has hurt the ethnic groups more than white households.
Racial homeownership trend rate increased from 2017 to 2021 for Blacks, Latinos, and Asians according to the latest “Latino Housing Journey” published by Fannie Mae in 2023. Latinos increased the most estimated from the chart below at 4% from 47% to 51%. Asians increased by 3% from 60% to 63% and Blacks increased by 2% from 42% to 44%.
Despite the increase in the rate of racial homeownership, affordability challenges plague across the racial groups. The higher inflation, mortgage rates, higher home prices, and rent, and cost of goods have put a greater burden on Black and Hispanic homeowners. Disposable income under the Biden-Harris Administration has been eroded particularly since these demographics are more likely to be renters. The high rental costs and home prices have diminished their ability to save for purchasing a home. There is a lack of affordable/available housing due to a natural increased demand from having less disposable income and the flooding of immigration into metro cities. The increased demand of affordable/available housing with a stifled inventory has caused these rental prices to rise and depleted savings. Housing affordability must be customized for these ethnic groups to increase the buying power for a home.
Similarly, the denial rates for mortgage applications and mortgage rates adversely affected Blacks and Latinos more than white and Asians. The denial rate was 26% for Blacks and 22% for Latinos, compared to 16% white and 15% Asian. This denies access to credit and reduces buying power. Those who were able to secure a mortgage had higher rates greater than 6% than their counterparts. The lack of equity and greater debt reduces buying power putting them at a higher risk for banking institutions. As a result, banking institutions denied or offered financing at higher mortgage rates.
The policies that resulted in low inflation, low mortgage rates, and lower cost of living benefits all Americans regardless of ethnic group. Although the homeownership gap has always existed and must be addressed, the sentiment in the housing market was more favorable. We must restore the policies of the Trump administration first to bring back the improved homeownership rates and then begin the work of increasing affordable/available housing and reducing the gap.
October 15, 2024
By Sophia Georges
Copyright 2024 - Realsophy Real Estate, Sophia Georges
