After years of mostly steady decline, the Black homeownership rate in the US saw its largest jump on record in the early days of the pandemic. Now, soaring borrowing costs and home prices threaten to erode those gains.

Black Americans — who for decades in the mid-20th century were shut out of swaths of the housing market by redlining and other racist practices — are disproportionately likely to be first-time buyers. And newcomers face a particular disadvantage in this market: They haven’t benefited from rising home equity, so they may need to come up with larger down payments.

And that may prove an especially big hurdle in a demographic group where the median household income is lower than the national average.

Black buyers must navigate a drastically different landscape than in 2020, when mortgage rates had not yet climbed to their recent highs and federal stimulus checks were helping many consumers feel flush. That year, Black homeownership jumped to nearly 46%, the highest since 2010, according to Census Bureau data, and held close to that rate in 2021 and 2022.

But that relatively brief window of opportunity has closed.

“It’s an incredibly difficult market for all home buyers right now, especially first-time home buyers and especially first-time home buyers of color,” said Jessica Lautz, deputy chief economist for the National Association of Realtors.

Affordability Crisis
Almost half of Black home buyers in 2022 were first-time buyers, according to a report by the NAR.

Their challenges are in sharp relief in the Atlanta metro area, which is home to the second-largest Black population in the US. The median home price there in November was 54% higher than it was four years ago, a larger jump than the 37% increase seen nationwide.

That’s made for a frustrating house-hunting experience for Shakeira Wesley and her husband Tyreke Wesley, who have been looking for a home in Atlanta since September. The couple has been pre-approved for a $265,000 mortgage loan, but is struggling to find a place in that price range. They have extended their search a bit further out into Decatur, Georgia.

“In our area where we’re renting, for $265,000 you can get, like, a shack — and I’m not even exaggerating,” Shakeira Wesley said.

Omid Zanjanchian, Wesley’s real estate agent, said he’s seen a decline in clients and transactions since mortgage rates began climbing. Many of his clients, who he said tend to be Black first-time buyers, are being approved for smaller loans and taking longer to find homes.

“You have to get creative and kind of look at certain pockets of the city or go a little bit further out from the city to find that level of affordability,” Zanjanchian said.

The affordability crisis is hardly unique to Atlanta. The median home price in the Chicago metro area, another place with a large Black population, was $298,789 as of November, up 37% from four years earlier, according to the Federal Reserve Bank of Atlanta. And the median home price in the Washington metro area stood at $511,484 in November, an increase from $401,025 four years prior.

The Atlanta Fed tracks housing affordability back to 2006, and the national measure is near its lowest point in the available data.

Mortgage rates have begun to decline over the last couple of months, but remain well above early pandemic levels. The US average rate for a 30-year fixed loan was 6.69% for the week of Jan. 25, according to Freddie Mac.

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