Friday, June 3, 2016

I am featured in this article on and discussing challenges woman and minority home buyers face.

Women and Minorities Lag Behind in Homebuying Rates

Minorities and women are still lagging behind their counterparts on purchasing homes compared to Caucasians and men, according to a Trulia report.
The study by Trulia, a San Francisco-based real estate website, found that even when women and minorities are earning the same income as white men, their levels of homeownership have still not caught up. Compared to Caucasians, black Americans remain 56.9% less likely to own a home, especially in the Northeast and Midwest. Blacks have larger homeownership rates in California, Florida and Texas.
The Hispanic population fared slightly better: 50.9% are less likely than whites to have a mortgage. More Hispanics are likely to own with a mortgage at the same rate or better in the Southwest and West. In El Paso, Texas, Hispanics own homes at more than twice the rate of whites and make up more than 75% of all households.
Minorities are more likely to be homeowners in cities where the heads of households of that minority group comprised of a large share of the overall population. Trulia found that in the San Francisco Bay Area cities, Chinese-Americans are twice as likely to own homes as whites, but they are still 38.9% less likely to have a mortgage across the U.S.
A large contributing factor on why minorities have not made larger gains in homeownership compared to Caucasians is because their families are less likely to be able to contribute to funding part of a down payment, said Ralph McLaughlin, chief economist for Trulia.
"If your parents owned a home, you are more likely to own one," he said. "For many minorities, they tend to earn less money and are less able to save up for a down payment compared to their white counterparts."
Another roadblock that minorities face is discrimination and a disparity in loan applications being approved, along with understanding how to buy a home, said Crystal Green, a real estate broker with Level Group, a New York real estate brokerage company.
"This can be remedied by neighborhood outreach groups educating women and minorities on the buying process and demystifying it," she said. "A lot of people are not aware of FHA loans which require minimal down payments or forgoing the bank route all together and going to your local credit unions that often have less stringent rules and flexibility to help buyers qualify for financing."
Women Making Gains
While women have not caught up with men and are still 10.5% less likely to have a mortgage, in cities such as Honolulu; Winston-Salem, N.C.; Seattle; Miami; and Tacoma, Wash., they fared better. One contributing factor is that there remains a gap of 6% more single women compared to single men. Out of the single women, 37.2% were parents compared to 11.7% men who were parents.
"Single parents are losing out on homeownership because they have to spend a higher share of their income towards child care," he said.
Despite having less earning power than men, many women are choosing to buy homes before they have a partner or get married to share their expenses, said Green.
"Women are starting to earn more money than they have historically, bringing more of them into the buying pool," she said. "Most women are marrying later in life and feel if they have to pay housing costs, they may as well invest in something."
Many women and minorities are faced with earning lower salaries than Caucasian men even though they are conducting the same type of work.
"They don't have the same earning power as white males and this results in being unable to accumulate enough of a nest egg to cover a down payment, closings costs and still have a rainy day fund," Green said.
The lower levels of homeownership could be attributed to overall views on real estate. Real estate is now seen more favorably as a good investment with 35% who agree to this sentiment, compared to only 19% in 2011, according to an April poll conducted by Gallup, a Washington, D.C.-based data analytics company. Americans find that stocks and mutual funds are the next best investment option with 22% who agree while 17% favor gold, 15% chose for savings accounts or CDs and 7% prefer bonds.
Millennials Prefer Renting
While Millennials have voiced the desire the own a home in the future, they are keen to keep renting since many of them switch jobs frequently, have not amassed the down payment or do not want the financial commitment. The zeal to pursue the "American dream" of owning a home has faded.
During the period of 2005 to 2015, the number of people under the age of 30 who rent grew by 11% while 34% more Gen X-ers ages 30 to 49 rented, according to a Harvard University's Joint Center for Housing Studies.
Renting is becoming widespread among income groups since 18% of the increase in renters during this decade earned $100,000 or more and the number of renters in the top income bracket grew by 61%, the report said.
A Gallup report in 2015 showed that 41% of non-homeowners who do not have plans to buy a house "the foreseeable future" and 34% of Americans renting their home. The number of people owning homes has fallen to 61%, the lowest amount in almost 15 years.
Renting has emerged as a norm for a third of the adults in the U.S., wrote Art Swift, a managing editor at Gallup. The data mirrors the U.S. Census Bureau's estimate in the fourth quarter of 2014 that 64% of Americans are renters.
Since many Millennials are more mobile and have experienced a slower start to their careers, they are not in a rush to purchase a home, said McLaughlin. Others are frustrated at the increasing prices of homes, which hinders their ability to save for a down payment as wages and income growth have been modest.

"They are buying homes at lower rates because they move around more than other generations," he said. "For many potential homeowners, it is not a lack of desire, but rather their financial circumstance such as flat wage growth which is inhibiting their ability to save up for a down payment."

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