Home Buying Roadblocks Universal Across Races and Ethnicities, Say Realtors and Potential Buyers
WASHINGTON (September 14, 2023) – The National Association of Realtors® (NAR) has recently released two insightful reports detailing the experiences and barriers encountered by prospective home buyers of various races and ethnicities in the present-day real estate market. These reports, conducted in collaboration with Morning Consult, indicate that high home prices and mortgage rates, coupled with a restricted inventory, stand as the primary barriers to purchasing a home.
In the meticulously compiled 2023 Experiences & Barriers of Prospective Home Buyers Across Races/Ethnicities report, individuals from White, Hispanic/Latino(a), Black, and Asian backgrounds shared their perspectives and experiences. Similarly, the 2023 Experiences & Barriers of Prospective Home Buyers: Member Study gathered insights from Realtors® who specialize in residential real estate to understand the experiences of the most recent buyers they have assisted.
Jessica Lautz, the deputy chief economist and vice president of research at NAR, shared a grim insight into the existing scenario, emphasizing that the housing market is witnessing its toughest affordability conditions in nearly four decades. The issues are magnified for first-time buyers, notably those from underrepresented segments of the population.
A significant portion of potential buyers across all racial and ethnic groups are adopting a waiting strategy, hoping for a reduction in home prices and mortgage rates before making a purchase. The responses varied slightly with Asian (27%), Hispanic (24%), Black (20%), and White (15%) prospective buyers indicating they are holding off their purchase awaiting a dip in prices. The range of those waiting for a decline in mortgage rates was between 18% to 25% across all groups.
Realtors® echoed the sentiments of consumers, pin-pointing the lack of affordable homes, high prices, and rising mortgage rates as the predominant factors deterring buyers. The reports highlighted that these elements are contributing to an increase in the overall monthly mortgage payments, making home buying a far-fetched dream for many.
Despite the discouraging landscape, prospective buyers are not shying away from saving for a hefty down payment, even though 6% to 9% find this to be a challenging task. Current rent or mortgage payments and credit card debts were cited as substantial hurdles in amassing savings for a down payment. Sadly, awareness regarding the availability of down payment assistance programs remains notably low, with a third of all respondents admitting to not being aware of such aids.
In a striking revelation, more than half of the respondents across Black, Asian, and Hispanic groups who have encountered discrimination attribute it to their race or ethnicity. This discrimination predominantly manifested in being guided towards or away from certain neighborhoods and encountering stricter requirements. Dishearteningly, a majority of these incidents go unreported, reinforcing the necessity for stronger oversight and awareness initiatives.
Lautz stressed the importance of down payment assistance programs such as FHA, VA, or USDA loans in facilitating homeownership for more first-time buyers, thus narrowing the existing racial homeownership gap. She urged real estate agents to undertake the onus of educating potential buyers about these programs.
NAR is not standing idle amidst these reports of discrimination, offering resources like Fairhaven, a training platform based on real fair housing cases, and Bias Override, focused on countering implicit bias, to its members. Furthermore, it continues to champion robust fair housing and fair lending policies in Washington, aiming to bridge the homeownership gaps prevalent amongst diverse demographic groups.
These reports offer an unflinching glimpse into the prevailing housing market, highlighting the multifaceted barriers prospective buyers are grappling with. It calls upon the real estate community and policymakers to foster inclusivity and fairness in the home-buying process, ensuring a fair shot for every American in achieving the dream of homeownership.
