According to the Urban Institute,  families have the stable income needed to support homeownership in smaller, more affordable communities, but are unable to afford a home because they can’t access a mortgage, or don’t have cash to buy a home.
The study states that there were more than 700,000 homes sold for $85,000 or less in 2018, and according to the Urban Institute, these homes are less likely to be financed with a mortgage than high-priced homes.
Limited financing options becomes a barrier for homeownership. Instead, the home is sold to investors, and families may turn to riskier seller financing options, such as land contracts, which have fewer borrower protections than mortgages.
The study continues by saying expanding access to small-dollar mortgages could help many households in communities with lower-than-average homeownership rates.
The Urban Institute states that about 10% of the Pittsburgh, Pennsylvania's households own a home worth less than $70,000, and 22% are renters. With average incomes of $36,000 and $32,000 for these owners and renters, respectively, they are close to suggest a small-dollar mortgage could put the renters in a position to buy a low-cost home.
Statistics show that 26% of Pittsburgh’s renters are people of color, with around 10% owning a home valued at $70,000 or less. Fewer than 5% own a home worth $150,000 or more.
A recent report by the National Association of Home Builders (NAHB), with data from the U.S. Census Bureau , found that homeownership rates for minorities fell to 64.2% in Q1 2019 from 64.8% to end 2018.
The “all minority” homeownership rate, which includes African American, Hispanic and “other households” (Asian, Native American, etc.), came in at 47.1% in Q1 2019—a slight year-over-year decrease from 48%, and a decline from 47.7% in Q4 2018.
Recent NAHB information revealed that the amount of newly-formed owner-occupied home grew in the first quarter. Expansion during Q1 2019, though, was slower than last year, indicating the decline of affordable housing due to elevated home prices.