Brian McCaw
The consensus is still out there that owning a home is the “American Dream” but a dream to whom? A new study says that if you are Black or Hispanic you’re going to have a much tougher time buying your home than if you were white. Real estate website Zillow conducted a study on mortgage approval rates and came out with the following data.
The study found that white people who apply for a conventional mortgage are denied just over 10% of the time. By contrast, blacks who apply for the same loans are denied nearly 28% of the time, while Hispanics are denied 22% of the time. The report was based on 2013 data from the federal government, which annually collects information from mortgage lenders to identify possible discriminatory lending practices and to ensure that housing needs of all communities are being met.
“Home ownership, being a path to wealth and vehicle for savings, is a very important part of Americans’ lives,” said Skylar Olsen, senior economist at Zillow. “When we look at home ownership patterns over time, we do see some pretty shocking differences.”
So what does this all mean to homeowners? It might be more of a reflection of how policies haven’t changed much in the last 100 years. Based on the census data, the difference in home ownership between blacks and whites is nearly identical to the numbers that were found in 1900. In fact, more than 70% of white people own their homes, compared with about 42% of blacks and 45% of Hispanics, according to Zillow.
One of the main reasons for the difference is income numbers. On average white mortgage applicants made $20,000 more per year than Black or Hispanic applicants. The disparity is also not that much different when it comes to lower income groups.
The denial rates on FHA loans too are a lot higher for blacks (24.3%) and Hispanics (20.5%), than for whites (14.2%), according to the study.
“It’s clear that the housing playing field remains strikingly unequal in this country,” said Humphries.
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