Homeownership has always been part of the American dream — but it hasn’t been equally achievable for all.
Homeownership has always been part of the American dream — but it hasn’t been equally achievable for all. Understanding these gaps is important as homeownership offers stability for families and it is one of the key means of building wealth in the U.S.
It’s more important than ever that lenders and real estate professionals work together to make sure that their practices allow all buyers access to the same housing opportunities. We started Ribbon to help make homeownership possible to everyone. This is why:
Although the Fair Housing Act was passed in 1968, which made it illegal for anyone to be discriminated against when renting or buying a home, the effects from a long history of inequality are still prevalent today.
Since the Great Recession, disparities between Black and White homeownership rates in the U.S. have increased to their highest levels in 50 years, from 28.1 percentage points in 2010 to 30.1 in 2017. According to the most recent data from the Home Mortgage Disclosure Act, Black applicants were denied a mortgage at a rate 80% higher than White applicants, largely due to poor credit scores and higher debt-to-income ratios.
There have been few steps made to resolve the issue. Currently there are state and local government programs available to low to moderate-income minority buyers. This includes down payment assistance, grants, subsidies, homeownership vouchers, forgivable loans, and soft second mortgages. But there are multiple plans and bills currently in discussion. For example, the Consumer Financial Protection Bureau proposed a rule that would make it easier for borrowers with a higher debt-to-income ratio to qualify for a mortgage loan. The National Association of Realtors has also laid out a five-point plan for how the real estate industry can provide support in increasing Black American homeownership.
For now it is on lenders and agents on a local level to keep these numbers in mind and create change.
Another group that sees difficulty in buying a home are single parents—as they lack the two-income family structure. In the U.S., 27% of single parents are living in poverty compared with 16% of cohabiting parents. Rising house prices, lack of affordable child care, and inflexible work schedules make it difficult for single parents to afford a home.
There are several programs available to help single-parent families with affordable housing. There are grants available to single parents and state and local homebuyer assistance programs in defined areas such as cities, counties, or certain neighborhoods that offer assistance to single parents.Visit the U.S. Department of Housing and Urban Development (HUD) to learn more about local homebuying programs.
Rising income inequality and a lack of affordable housing have made it difficult for low-income families, of every kind, to find a place to call home. The U.S. Census Bureau’s data indicates that income inequality was already at its highest level during a period of economic expansion before the pandemic hit.
Shutdowns and layoffs over the past year have only made it harder. According to the Pew Research Center, 46% of lower-income adults say they have had trouble paying their bills since the pandemic started and 32% say it’s been hard for them to make rent or mortgage payments.
Saving for a down payment can be tough for anyone but there are some programs that can offer assistance to low-income families.The Federal Housing Authority (FHA) has FHA home loans for first-time homebuyers or for those who haven’t owned a home in more than three years. It requires only a 3.5% down payment and doesn’t have income-eligibility requirements. Fannie Mae has a HomeReady program and Home Possible loan that features low down payment requirements. The USDA allows homebuyers to get loans with no money down and 100% financing—but only if you’re buying on qualifying rural land. Military homebuyers can get a VA mortgage loan, no down payment requirement. And there are multiple charities, employer assistance, and state run government programs that offer down payment assistance to those who qualify.
Women outpace men when it comes to homeownership, however, women are benefiting less from their investment. This gender gap has been attributed to the negotiation process, market timing, and potential attachments to a particular property. While women do ask as much as men during negotiations, they don’t receive at the same rate.
According to Yale Insights, women see lower returns, losing out on an average of $1,600 per year on the same household. Single women also spend 2% more when buying a house and get a price 2% less when it’s time to sell. Losing this percentage on housing greatly impacts the gap in wealth accumulation.
For single women homebuyers, check out the HUD website for available grants or talk to a housing counselor. There are also housing programs that offer assistance to low-income women and single mothers.
For members of the LGBTQ+ community, discrimination when it comes to house hunting is still a major concern. According to a Realtor.com® survey of 1,538 U.S. members of the LGBTQ+ community, 29% reported that they had experienced discrimination or suspected they were victims of it. For the transgender community, that number jumped to 44%.
“Discrimination against the LGBTQ+ community in housing is real, but we know the fear of discrimination is even greater,” said Ryan Weyandt, CEO of the LGBTQ+ Real Estate Alliance, in a statement. “Our community already must place an outsized emphasis on identifying safe and accepting communities. … I don’t believe we are going to see the number of LGBTQ+ homeowners rise without eliminating housing discrimination against us.”
Not only do members of this community struggle with discrimination during the homebuying process, but LGBTQ+ individuals, who are more likely to be first-time homebuyers, also face income disparities and a lack of affordable protected housing.
For information regarding HUD’s Equal Access Rules, the Fair Housing Act, and how to file a discrimination complaint, visit the HUD website for helpful information and resources for LGBTQ+ homebuyers.
Too many people in the U.S. are facing challenges when it comes to equal access to homeownership. If you have been denied housing or financial assistance due to discrimination, the Equal Opportunity in Housing program was put in place to provide an enforcement system that is subject to judicial review.
Ribbon’s mission is to make homeownership achievable for all and we continue to strive for this every day. RibbonCash Offer is leveling the playing field for all buyers by removing barriers to the home transaction process. Speak with Ribbon’s experts to learn more about RibbonCash and help us get more people into the homes they dream of.