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How Homeownership Difficulties Differ for People of Color

The housing market in its current state—featuring low inventory, puffed-up prices, intense competition, unaffordability, and pandemic-related instability—presents challenges to most people pursuing the American Dream—that is supported by data gathered for the U.S. Mortgage Insurers' 2021 National Homeownership Market Survey, which specifically looked at responses by race to better understand various demographics' perceptions about homeownership, the mortgage process, and the challenges people face when trying to purchase a home.

"This survey underscores the need to address the nation's undersupply of housing, and specifically affordable housing because too many people are being left out of the market or face significant barriers to get into the housing market," said Lindsey Johnson, President of USMI. "Our survey shows that low- to moderate-income households and underserved communities struggle to become homeowners due to several major factors including low housing supply, lack of affordable housing, and personal economic factors such as imperfect credit score or the inability to afford a 20% down payment."

USMI's survey revealed that when broken down by race those economic factors intensify. Seventy-four percent of Black and 65% of Hispanic respondents reported that in addition to the lack of affordable homes or low supply, the inability to save for a down payment (39% of people of color) and imperfect credit history (37% of all Black and Hispanic respondents) are the biggest challenges they face when it comes to buying a home.

Those who own homes have run into problems exacerbated by the national health crisis the country endured throughout 2020. This study (like many others) showed that those issues were more pronounced for households of color. The No. 1 concern among Black and Latinx respondents was falling behind on rent or mortgage payments. Twice the number of Black respondents (20%) and more than one and half times the number of Hispanic respondents (16%) reported this concern compared to white respondents (10%).

The USMI survey indicated that many of the roadblocks that people of color face can be attributed to economic situations. All of those aiming to become homeowners could benefit from a better understanding of the mortgage process, the report showed.

For example, of all survey respondents, 45% mistakenly believe they need a down payment of 20% or more to qualify for a home purchase. Another 30% indicated that they do not know about down payment requirements. In truth, you can qualify with a down payment as low as 3%, according to USMI.

Most respondents also affirmed interest in low down payment loans through both the conventional and government-backed markets, such as the Federal Housing Administration (FHA).

See the full 2021 National Homeownership Market Survey here.

About Author: Christina Hughes Babb

Christina Hughes Babb is a reporter for DS News and MReport. A graduate of Southern Methodist University, she has been a reporter, editor, and publisher in the Dallas area for more than 15 years. During her 10 years at Advocate Media and Dallas Magazine, she published thousands of articles covering local politics, real estate, development, crime, the arts, entertainment, and human interest, among other topics. She has won two national Mayborn School of Journalism Ten Spurs awards for nonfiction, and has penned pieces for Texas Monthly, Salon.com, Dallas Observer, Edible, and the Dallas Morning News, among others. Contact Christina at [email protected].

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