Home buying by minorities increases Rise in past 3 years helps offset decline among young buyers

Hispanics set pace

Overall ownership in Baltimore area hit 73% in third quarter

November 09, 1997|By Samantha Kappalman | Samantha Kappalman,CONTRIBUTING WRITER

C A surge in minority homeownership nationwide in the last three years has apparently offset a large decline in usual first-time homebuyers, according to a report issued by the Harvard University Joint Center For Housing Studies.

The report also concluded that generations of older minorities, who might have been discriminated against or thought they would be, have been permanently discouraged from buying homes and have "missed out on the wealth-building potential of homeownership."

Overall, the study showed a 5.4 percent increase nationally in homeownership from 1993 to 1996.

"In 1996, minorities were only 15.4 percent of all owner households," said Josephine Louie, research analyst for the Joint Center for Housing Studies. But in the three-year span of 1993-1996, Louie said minorities accounted for 30 percent of the overall ownership growth.

"They are a big share of the growth of homeowners," she said.

The minority with the largest growth were Hispanics, who showed a 16.3 percent rise in homeownership, the study showed. Blacks had a 7.5 percent growth and Asians, Pacific Islanders and Native Americans -- as a group -- grew by 11.8 percent.

The minority increase is noteworthy because of the smaller number of people of traditional first-home buying age, which the report defined as the low 20s to low 30s. Louie said the shortage stems from two reasons.

"The first reason is that those not buying are in the baby bust generation, so-named because there are fewer people in that generation. That's why there are fewer people buying homes. The baby busts are those born between 1965 and 1975," she said. "The second reason is that fewer households have formed among that generation because a trend of more and more adults living at home."

A census study by the U.S. Department of Housing and Urban Development confirmed the homeownership increase. Homeownership rates rose in the third quarter of 1997 to 66 percent, the highest in U.S. history. The Baltimore metropolitan area showed a 7.5 percent increase in homeownership from the end of 1996 to the third quarter of 73.1 percent, the highest ever.

However, Louie said many low-income households don't have enough money for a down payment, and that is where federal assistance programs kick in.

"Over the past several years, many of the federal programs have started to show some effect because lenders have begun to reach out to these markets," Louie said. "Changes in federal policy will have a large impact on housing, especially for low-income households."

In Baltimore, David Elam, director of the Baltimore Partnership Office for Fannie Mae, said it is helping the city increase minority homeownership. He said Fannie Mae participates in some of the programs the city has implemented in order to encourage the increase.

"One program the city started is employer-assisted housing. The city of Baltimore, as an employer, created a program to help its employees purchase homes in the city. Over 50 percent of those buyers were African-American, 217 homebuyers," Elam said.

The Settlement Expense Loan Program is another program to increase minority homeownership, he said. Under this program, homebuyers can receive loans up to $5,000 toward closing costs and settlement fees.

"There are over 2,000 individuals purchasing homes through use of that program. The city has put up about $10 million," he said.

However, Elam said Fannie Mae is not interested just in making minorities homeowners and then ending the relationship. He said the company is interested in keeping those homeowners in their homes.

"With some programs there may be lower down payments and financial assistance, but we also want to look at good credit," he said.

"There is a need for housing counseling where housing counselors play a major role to deal with Realtors and lenders, so that minorities do not just qualify for a mortgage, but for the long term. They have to go through a process, not through a quick fix."

Although the potential for building up home equity is limited for low-income households, overall, homeownership remains a key economic asset for families, Louie said.

"Housing is one of the main sources of wealth-building in this country -- it's a huge asset," she said, and noted the asset difference between owners and renters.

The net wealth [total assets after subtracting mortgages and debt] of homeowners across the country was a median $102,000 per household in 1995, but for renters the median was $4,750, so owners have substantial advantage."

Pub Date: 11/09/97

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