Buying a home is challenging. Even for those with advantages, home ownership is often the result of saving and planning. For those with relatively few advantages, especially lower incomes and fewer employment opportunities, these same challenges can be almost insurmountable.
In Atlanta, it is clear blacks and Hispanics have very few advantages when it comes to house purchases. Those who have achieved home ownership have experienced a rockier ride through the market’s recent ups and downs.
Recently, Zillow analyzed 2013 home loan data obtained through the federal Home Mortgage Disclosure Act and paired it with home value information to paint a picture of housing market access and performance by race, both nationwide and in several large metro markets.
The results were stunning.
Together, Hispanics and blacks compose 43 percent of the population in metro Atlanta, but submit only 12 percent of conventional loan applications. In a modest improvement, 40 percent of loan applications backed by the Federal Housing Administration – loans designed to make home ownership more accessible for more borrowers – are submitted by black or Hispanic applicants.
But not only are they applying less often, when they do apply, they’re far more likely to be denied.
Black applicants for conventional mortgages in Atlanta were almost three times more likely to be denied than white applicants; Hispanics were denied more than twice as often as whites. Black and Hispanic denial rates for FHA loans were actually higher than for conventional loans: 26 percent and 23 percent for FHA loans, respectively, compared to 25 percent and 19 percent for conventional loans.
Fewer applications, coupled with more denials, of course means fewer homeowners. Home ownership rates among blacks (47 percent) and Hispanics (43 percent) in Atlanta is well below that of whites (76 percent).
Additionally, in Atlanta’s predominantly black and Hispanic neighborhoods, home values fell farther during the recession and remain farther behind in their recovery than white neighborhoods. From the peak of the market to the bottom, median home values in black neighborhoods fell 51 percent; in Hispanic communities, home values fell 43 percent. In white areas, home values fell “only” 22 percent.
At of the end of 2014, home values in black neighborhoods remain 34 percent off their peak levels, and 20 percent below peak in Hispanic areas. Home values in white neighborhoods, meanwhile, have almost entirely recovered, currently a mere 2 percent below pre-recession peaks.
It can be tempting to blame these numbers on overt discrimination, but Home Mortgage Disclosure Act data aren’t detailed enough for us to determine discriminatory differences. In reality, what we’re really observing are consistent and critical differences in qualifications and resources among black, Hispanic and white borrowers which affect their ability to secure an affordable home loan.
In Atlanta, the median income among black and Hispanic households is $42,000 and $39,000 per year, respectively. For white households, the median income is $69,000 per year. Many of these income disparities can be attributed to overall unemployment by race: Currently, roughly 15 percent of blacks and 10 percent of Hispanics in greater Atlanta are unemployed, compared to 7 percent of whites.
Given how critical a healthy income and steady employment are toward securing the dream of home ownership, it’s no wonder experiences are so different among races.
But there is some hope for the future. Home values in predominantly black and Hispanic communities are expected to grow by 17 percent or more over the next year, compared to roughly 10 percent in Atlanta’s largely white neighborhoods.
Owning a home is a fundamental part of the American Dream; it is a dream shared equally among all races. But while the goal is equally shared, the reality is strikingly different. For all the progress we’ve made toward social equality over the past century, it’s clear we still have a long way to go.
