Report reveals decline in African-American homeownership

African-American homeowners were disproportionately affected by subprime lending and as a result, African Americans lost 53 percent of their wealth. That’s according to the State of Housing in Black America (SHIBA) report prepared for the National Association of Real Estate Brokers (NAREB).

NAREB President Donnell Spivey spoke to a group of real estate professionals in Philadelphia last week. The event was sponsored by the Philadelphia chapter of NAREB and was one of more than a dozen such presentations across the country.

The median net worth of African-American households with home equity dropped from $12,124 in 2005 to $5,677 in 2009. Compared to non-Hispanic white households which saw a 16 percent drop to $113,149.

“The report shows that homeownership has declined in the African-American community,” Spivey said. “Consumers have lost confidence because of the high number of foreclosures.” According to the report, one out of five African-American homeowners lost their home during the recession.

“The lack of generational education about homeownership has been one of the issues,” Spivey said. “People preyed on people who lacked the education about the housing products. They didn’t know enough to say ‘no’ to subprime mortgage products.” The report says that the homeownership rate for African Americans dropped from just under 50 percent in 2004 to just above 43 percent. Some experts estimate this rate could continue to slide to as low as 40 percent.

Philadelphia City Councilman Kenyatta Johnson also spoke during the meeting. “Owning a home for African Americans has always been a challenge. They are two to three times more likely to be denied a loan. In Philadelphia, the median home price for black homeowners is $75,000, compared to the median price of $174,000 for white homeowners,” he said.

“NAREB is taking the lead to educate real estate professionals and consumers,” Spivey said. “Educating consumers is the key before they invest in a home.”

Michelle Kerr Spry, executive director of the Homeownership Counseling Association of Delaware Valley, said that they handled 3,000 foreclosures in 2008. Currently they are seeing 300 per week and of those homeowners, less than five percent received any financial counseling prior to purchasing a home.

NAREB Executive Director Antoine Thompson urged real estate professionals to help turn the tide and increase homeownership rates. “Due to the changing demographics over the next 15-20 years, black and Hispanic consumers will be the majority of homebuyers. We should be alarmed that the homeownership rate has declined in the African-American community,” he said.

The oldest minority professional trade association in the United States, NAREB’s mission is promoting democracy in housing.