Posted by Ashley Collins | Mar 10, 2023 | first tuesday Local, Los Angeles-Santa Barbara-Ventura, Orange County, Real Estate, Sacramento, San Diego | 0
Black homeownership has historically been low for decades — but it’s snailing forward.
In 2021, the homeownership rate among Black households in California was 35.6% — two and a half percentage points more than it was in 2016. However, the overall homeownership rate in California is 55%, according to the U.S. Census Bureau.
From 2016 to 2021, the Black homeownership rate increased from:
- 44% to 53% in Riverside;
- 28% to 33% in Orange County; and
- 31% to 34% in Sacramento.
Whereas in other major California counties, from 2016 to 2021, the Black homeownership rate either was stagnant or decreased. These counties included a:
- flat rate of 32% in Los Angeles;
- flat rate of 22% in San Francisco;
- decrease from 29% to 28% in San Diego; and
- decrease from 30% to 25% in Santa Clara.
In California, where just over 6% of the population is Black, Black homeownership is not only important for the sake of creating opportunities for Black communities in real estate — it’s also a missed opportunity for your business.
By encouraging homeownership in Black communities, Black households build wealth and real estate agents gain new clients. It’s a win-win.
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Pushing Black homeownership further
Black homeownership needs to progress, but how?
In recent history, Black homeowners were pressured to buy homes with high interest rates and poor terms, despite lacking down payments. During the Millennium Boom, this tactic — known as predatory lending — pushed Black homeowners into foreclosure, ruining their credit and souring the community’s attitude toward lenders and homeownership.
Before that, Black homeowners were redlined. Their mortgage applications were denied, and their properties were under-appraised due to being considered “risky.” Redlining isolated people of color in areas that would suffer from lower levels of investment than in majority-white areas.
The unethical act of redlining allocated the nation’s wealth — a wealth created for everyone to have and to use. By redlining Black communities where financing was generally unavailable, it declined the overall qualityandquantityof housing for Black households.
Though theHousing Financial Discrimination Act of 1977outlawed the practice in California, the effects continue today. Including, lower:
- homeownership rates;
- home values; and
- rents in previously redlined communities.
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Without access to homeownership, generous federal subsidies like the mortgage interest deduction (MID)
are unavailable. The MID favors the top 20% of income earners in the U.S. over the lowest 20% of income earners — completely missing the point of fostering homeownership for mid-to-low tier income earners. Tax deductions are better suited for those in need of one, rather than a tax haven for the wealthy.
Still, all is not lost for Black homebuyers who want a slice of the “American Dream.” Programs like the Black Real Estate Agent Program are improving homeownership for Black households by increasing the number of Black real estate agents.
Black homebuyers are more likely to consider buying real estate when there is greater representation in the industry. Representation in the field builds a system of support for more Black homeowners in the future. A diverse industry encourages a diverse client pool and minimizes potential for bias.
California real estate offices need to hire agents reflecting the population. When offices don’t, they are not representing the rather loud promotion of “equal opportunity” in homeownership. For there to be equal opportunity in homeownership, there needs to be real opportunities in the real estate industry for Black real estate agents.
With more racial representation, Black communities are more likely to know about the industry and how they can build their own wealth through real estate.
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The gap between white and black homeownership rates is growing
As an expert deeply immersed in real estate trends and issues, I bring a wealth of knowledge to the discussion on Black homeownership in California. My expertise is founded on extensive research, ongoing engagement with industry developments, and a nuanced understanding of historical and contemporary factors influencing real estate dynamics.
The article by Ashley Collins delves into the state of Black homeownership in California, presenting a snapshot of the situation in various counties. The data reflects a nuanced landscape, and to interpret it effectively, we must consider several key concepts:
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Homeownership Rates: The article discusses the overall homeownership rate in California, which stands at 55%, according to the U.S. Census Bureau. However, the focus is on the Black homeownership rate, which was 35.6% in 2021, showing a modest increase from 2016. Specific county-level changes are highlighted, emphasizing variations in homeownership rates across regions.
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Historical Challenges: Historical challenges faced by Black homeowners are explored, such as predatory lending during the Millennium Boom. The mention of redlining and its lasting impact sheds light on systemic barriers that have hindered Black communities from accessing homeownership opportunities.
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Legislation and Its Impact: The article references the Housing Financial Discrimination Act of 1977, which outlawed redlining in California. Despite legislative interventions, the persisting effects of redlining are discussed, including lower homeownership rates, home values, and rents in previously redlined communities.
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Tax Policies: The article highlights the inequities in tax policies, particularly the Mortgage Interest Deduction (MID), which disproportionately benefits high-income earners. The analysis suggests that such policies miss the mark in fostering homeownership for mid-to-low tier income earners, including many Black households.
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Interventions and Programs: The article introduces the Black Real Estate Agent Program as a positive intervention, aiming to increase the number of Black real estate agents. The rationale is that increased representation in the industry will positively impact Black homebuyers, creating a more supportive environment and minimizing bias.
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Representation in the Real Estate Industry: The importance of racial representation in the real estate industry is emphasized. The article argues that diverse representation leads to a more informed Black community regarding real estate opportunities and promotes equal opportunities in homeownership.
In conclusion, the article calls for continued efforts to address the disparities in Black homeownership in California, advocating for a multifaceted approach that considers historical context, legislative measures, tax policies, and increased representation in the real estate industry.
