Blacks Have Trouble Buying Homes : Home Buying: Study finds that only 3.5% of black renters in U.S. can financially qualify. Discrimination is also seen as a factor.
WASHINGTON — Kathy and Wendell Coates are saving for a down payment on their first home, but the amount of money they can set aside by next spring may not be enough. Their problem is shared by thousands of other black families who find it difficult, if not impossible, to make the leap from renting to owning a home.
Harvard University’s Joint Center for Housing Studies reported recently that 3.5% of black renters in the United States are able to buy homes now, compared to 16.9% of whites. Lower incomes than whites and racial discrimination in buying and borrowing are the major barriers to black home ownership, researchers said.
The percentage of blacks locked out of the housing market has changed little in 30 years, said William C. Apgar Jr., acting director of Harvard’s Joint Center for Housing Studies, which issued the report.
A major cause is blacks’ lack of money or property to pass on to their children, a problem that perpetuates itself, he said. Home ownership is “a wealth-accumulation vehicle,†an important source of funds and savings for most white families.
Many white purchasers, especially those buying their first homes, get help from their families through gifts, loans or inheritances.
The Harvard report said 13.6% of the total 29 million renters of all races in the United States could qualify for a mortgage to buy “the typical starter home in 1986,†the latest year for which figures were available.
The 3.5% of black renters who can buy assumes that they can make a down payment of 10% of the mortgage. If they had to make a 20% down payment, the amount most banks require, only 1.5% could purchase a house, according to the Harvard study.
Renters, particularly those in high-cost areas, generally have a hard time saving money, analysts said.
“With rent as high as it is now, it’s taking all (of black renters’) money, and they can’t save for the down payment and closing costs. The odds are really against you,†said Alyce Payne, a real estate agent who is black.
The median income of black families nationally is $19,329--half the $33,915 figure for whites as of March, 1989, the Census Bureau said.
The most recent report of family net worth--its savings and major assets minus debts--shows a much bigger gap between whites and blacks. The net worth of white families was nearly 12 times that of blacks when the report was issued in 1984--$39,135 for whites and $3,397 for blacks.
“It’s very difficult, if not almost impossible, for blacks to make that transition†from renting to owning, agreed Leroy Hubbard, a housing activist and president of the Metropolitan Washington Housing Assn., a policy and research organization.
In many cases they must “go out and borrow money, and work two or three jobs just to qualify for a loan. It’s very hard for them to become a part of the American dream and, believe me, they want to,†he said.
Only 45% of black households owned homes in 1986, compared to 70% for whites, and the value of blacks’ homes lagged behind those of whites, the Harvard study said.
MORTGAGE LENDER MARKET SHARE
Southern California mortgage lenders making home loans between $50,000 and $400,000 ranked by dollar volume for the second quarter of 1990.
Lending Institution Loan Count Dollar Volume Market Share 1--Great Western Bank 7,425 $1,098,531,437 9.69% 2--Home Savings of America 4,613 782,352,365 6.90 3--Bank of America 2,915 562,254,842 4.96 4--Home Federal 2,019 343,412,527 3.03 5--World Savings 1,818 330,213,527 2.91 6--American Savings 1,464 244,654,500 2.16 7--Directors Mortgage 1,902 237,517,834 2.09 8--California Federal 1,172 233,835,693 2.06 9--IMCO Realty Services 1,401 206,639,801 1.82 10--Countrywide Funding 1,352 203,821,690 1.80 11--Great American First 1,228 187,356,578 1.65 12--Western Savings 1,003 183,799,659 1.62 13--Coast Savings 989 166,289,311 1.47 14--Garfield Bank 861 162,744,796 1.44 15--Weyerhaeuser Mtg. 1,039 159,773,282 1.41 16--Plaza Savings 947 141,957,162 1.25 17--Citibank 702 140,068,650 1.24 18--First Federal 709 125,921,344 1.11 19--Security Pacific Bank 731 119,779,801 1.06 20--Franklin Mortgage 588 89,025,613 0.79 21--Commonwealth Mfg. 677 86,611,685 0.76 22--Guardian Savings 647 86,572,393 0.76 23--Sears Mortgage 493 84,483,114 0.75 24--Western Bank 703 82,280,365 0.73 25--Wells Fargo Bank 394 70,280,365 0.62 26--American Residential 456 68,152,462 0.60 27--GMAC Mortgage 433 64,671,655 0.57 28--First Franklin Fin. 400 64,096,750 0.57 29--First California Mtg. 442 62,739,579 0.55 30--First Nationwide 368 61,503,554 0.54 31--Western Cities Mtg. 455 59,812,282 0.53 32--Prudential Home 234 54,404,740 0.48 33--Imperial Bank Mfg. 340 51,768,506 0.46 34--PHH US Mortgage 258 50,659,025 0.45 35--Downey S&L; 265 48,602,697 0.43 36--Chase Home Mfg. 183 47,754,550 0.42 37--Southern California S&L; 266 47,604,260 0.42 38--United Savings Bank 294 46,970,080 0.41 39--National Pacific Mfg. 324 41,788,298 0.37 40--Citicorp S&L; 228 41,205,550 0.36 Other 42,788 6,942,197,960 61.235 Total 73,723 11,338,463,383
SOURCE: The Dataquick Report
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