Approximately 32% of Americans looking to buy a new home are first time home buyers. And like many other first time home buyers, Akisha Everett of Minneapolis has been looking for her dream home for months. Unfortunately, being continuously outbid has kept her from getting the keys.
“I am holding my breath,” Everett told StarTribune while she was still house hunting.
Everett is one of the many African Americans struggling in the midst of the housing market. Approximately 13.3% of the U.S. population is African American, but only 47.5% of black Americans owned homes as of 2008. In contrast, nearly 61.3% of the American population is non-Hispanic white. Up to 74.9% of white Americans owned homes in 2008.
In recent years, this disparity between races in the housing market has only grown. According to a new analysis of Census Bureau data, the Twin Cities, where Everett calls home, have the lowest rate of black homeownership out of 80 American cities. The Hispanic rate of homeownership in the Twin Cities has also fallen, but white homeownership has remained one of the highest in the country.
One of the reasons for the disparity includes a comparison of salaries between races. The average income for white households in Minnesota in 2015 was $67,000 in comparison to black Americans whose households totaled $30,300. For Hispanics, the average income was $43,400.
“Homeownership is the central vehicle Americans use to store wealth,” said Catherine Ruetschlin to Forbes. Ruetschlin is the co-author of a recent study entitled The Racial Wealth Gap: Why Policy Matters. “So homeownership and access to homeownership are at the heart of that widening wealth gap.”
Aside from income, the disparity also stems from the redlining of black neighborhoods. Since the 1934 National Housing Act, African American neighborhoods have been marked as credit risks. The effects of this redlining continue into the modern housing market where homes in black neighborhoods are considered of lesser value than those in white neighborhoods.
Discrimination in lending is another large factor. People of color, because of their lower incomes, are more likely to need a loan in order to pay the mortgage on their house. However, lenders have been known to overcharge black and Hispanic/Latinx households by giving them loans with higher interest rates as recently as 2012.
These high-interest loans helped to fuel the recent foreclosure crisis. In 2013, one out of every 96 homes filed for foreclosure. And between 2007 and 2008, Minneapolis’ black and Hispanic neighborhoods became the center of this crisis.
Now the Twin Cities housing market is up again, but still at the disadvantage of minority buyers. Lenders have made it more difficult to qualify for mortgages to reduce the risk of another foreclosure crisis. Therefore, minority buyers who have little to no credit must take yet another step in order to become advantaged enough to make an offer on a home.
“I have always dreamed of owning my own home,” said Everett to StarTribune. “I think it is important to start to create generational wealth for my children.”
After eight months of searching and visiting over 50 homes, Everett has now moved into a $190,000, three-bedroom house in north Minneapolis with her two sons.