Despite having a job that qualifies for student loan forgiveness, Candice Drummond and her husband are still burdened by debt, preventing them from purchasing a home closer to their family.
Drummond, an employee for New Georgia Project, an Atlanta-based nonprofit voter advocacy group, had approximately $175,000 in student loans forgiven under the federal Public Service Loan Forgiveness Program, which has helped them afford to live in metro Atlanta, she said. But her family is still waiting for her federal employee husband to have his share of loans forgiven.
“I have a third child on the way. You’d think that being married and having a dual-income household will make paying for these very reasonable irregular expenses of having a family and owning a home easier,” Drummond said.
She and her family hope to move to Washington, D.C., near her husband’s family – where houses are more than twice the value in Georgia. Most Southern states have higher Black populations and are among states with Black homeownership at or near 50%.
“Until his student loans are forgiven, we kind of feel like Atlanta makes the most sense for us as a family because D.C. would just be unaffordable with the debt he is carrying,” Drummond said.
Debt load a major issue
Debt load is one of several economic disparities that has resulted in Black Americans continuing to have the smallest growth in homeownership.
While Hispanic homebuyers have the largest share of student loan debt (46%), Black homebuyers follow behind at 33%, compared to white Americans (17%) and Asian Americans (13%), according to a recent report from the National Association of Realtors.
Over the past month, reporters from CNHI News nationwide have sought to examine affordable housing issues, who is most impacted by a lack of it, and what solutions states and communities have implemented in this multipart special report.
Tamryn Davis, a student at Albany State University, a historically Black university in south Georgia, is a first-generation college student. Her debt has also delayed plans for her 50-year-old father, who took out her student loans in his name.
“We actually live in an apartment in Atlanta, and he’s holding back from getting a house,” Davis said.
Black homeownership rates grew half a percent during the past decade to 44%, lagging behind the 50.6% rate for Hispanics, 62.8% for Asians and 72.7% for white buyers.
The National Association of Realtors reports that the 29% gap between Black and white Americans represents the largest since the 26% gap in 2011.
More income spent on housing
Because Black Americans have lower wages overall compared to white Americans, 30% of Black homeowners spend more than 30% of their income on housing, compared to 21% of white homeowners and 26% of Hispanic homeowners, the association says.
In 2021, the median income of Black renters was about $33,000 compared to $45,000 for white renters, according to the association.
“Less than 10% of the Black renters can currently afford to buy the median price home. and compared to other race and ethnic groups, this is a lower share, so we expect Black homeownership rates to continue to lag behind other racial and ethnic groups,” said Nadia Evangelou, senior economist and director of real estate research for the National Association of Realtors.
In Michigan, especially the majority-Black Detroit area, many hourly workers make close to minimum wage, which makes it hard for renters.
“There’s definitely a huge income gap in the state of Michigan compared to other areas, which has a direct impact on homeownership and whether or not you can afford or to be able to become a homeowner,” said JaLeissa Speight, a Black Michigan-based real estate agent and loan originator.
Due to lower incomes, Black homebuyers are less likely to have money saved for mortgage down payments. Approximately 16% of Black homebuyers use their 401k for a down payment, more than any other group, according to the National Association of Realtors.
“Have in mind also that Black Americans are more likely to be first-time homebuyers,” Evangelou said. “So for some homebuyers, usually they don’t have any wealth accumulated as existing homeowners.”
There is some good news for some minority groups. Behind Asians, Hispanics have seen the largest rate of homeownership growth, which Evangelou attributes to the group’s educational attainments. According to the U.S. Census, Hispanic college completion rates have risen to 22% compared to 15% a decade ago.
“And usually the relationship between education and income is strong, so higher education can help households to have a relatively higher income as well,” Evangelou said.
Speight advises prospective homebuyers to speak with a mortgage professional well before the homebuying journey to better prepare for loan approval and expectations and ultimately reduce the likelihood of a mortgage denial.
“Just trying to have those conversations and better overall habits, I think, is definitely something that is going to, (in the) long term, help reduce disparities we’re seeing,” Speight said.
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