Mortgage disparities limit rate of black homeowners in DC

The road to financial power and prosperity is paved with home ownership. Nationally, more than 70% of black wealth is tied to home ownership.

In 2020, following the death of George Floyd, there have been months of protests in DC and across the country. The protests have also sparked conversations about the links between policing issues and the economy, education, housing and equity. Americans of all races began to demand that the institutions with which they spent money and did business register their commitment to racial justice.

As justice in the courts has become a rallying cry against police misconduct and brutality, the fight for racial equity initiatives and policies has taken on a new focus. Major corporations such as Microsoft, PayPal, Facebook, JP Morgan Chase, Bank of America, Walmart and many more have pledged millions and billions of dollars in racial equity initiatives.

Unfortunately, two years later, those investments have done little to raise the needle in homeownership rates for Black Americans and Black residents of the District.

The home ownership gap persists

According to census data from Prosperity Now, the homeownership rate for blacks in DC is 35.2%, compared to 50.3% for whites. This gap contrasts sharply with neighboring black communities in Prince George’s County, Maryland, where the black homeownership rate sits at 61.1%. Because of these vast disparities in homeownership, black households in DC are three times more likely to have zero wealth.

Black homebuyers twice as likely to be denied mortgages in DC

Federal Home Mortgage Disclosure Act data, provided by Virginia-based Compliance Tech, showed that in 2020, approximately 32,238 loan applications were made or originated by mortgage lenders in DC.

White applicants were approved for 16,227 mortgages vs. 4,945 mortgages approved for black applicants in DC

“The data indicates that black homebuyers at 20.86% were denied mortgages at 2.7 times the rate of white homebuyers at 7.6% white,” said Maurice Jourdain-Earl, director General of Compliance Tech.

Despite historical discriminatory mortgage practices and rising home prices, government leaders, non-profit organizations, realtors and brokers continue to work hard to create more new black homeowners in the district. of Columbia.

Lledon Stokes, estate agent at Sotheby’s Realty, describes the situation.

“In 2021, I was able to help nine black families achieve the dream of home ownership in DC,” Stokes said. “I take pride in knowing other agents, having good negotiation skills, and preparing my clients for home ownership.”

Succeed against winds and tides

Stokes helped Lindsay McFarlane buy a condo in southeast DC Lindsay, a native of Nashville, Tennessee, moved to the area 10 years ago.

Lindsay McFarlane (buyer) and Lledon Stokes (real estate agent)

“Since I was younger and we came to DC on a family trip, I told my dad we had to live here,” McFarlane said. “After grad school, I moved around the district and rented various apartments in different parts of town, but I didn’t feel complete until I bought my first home.”

For many would-be black homeowners, their first hurdle remains getting approved for a mortgage, followed by winning an offer for a home. McFarlane was lucky when buying his house.

“We were the first to see the property. My agent Lledon was definitely a shark, we made an offer the same day and I was able to buy a slice of heaven in DC,” McFarlane said.

Newlyweds Ashley and Jamaal Smith, who married last year, recently purchased a new home in DC’s Brookland neighborhood. New Jersey native Jamaal and district-born Ashley decided to buy in DC because they love the neighborhood’s sense of community and vibe.

“Properties are appreciating and things are close,” Ashley said. Her husband added: “We love being able to walk to restaurants, shops, the gym and the park.”

Building a Great Team When Buying a Home in DC

A common theme for homeownership goals is preparation. Anyone considering buying a home should check their credit, learn about DC homebuyer assistance programs and grants, take a HUD-approved home-buying course, identify a good licensed real estate agent, and find a mortgage lender they can trust.

“The mortgage process was interesting because my bank wouldn’t give me a mortgage at a good rate, and they were cumbersome to deal with, so I had to go to a private mortgage company,” he said. said McFarlane.

A good team can make all the difference when buying a home.

“We have not encountered a bidding war; we made an offer on our first home and we were successful. We were able to work with a black lender, a black agent and a black building inspector. Our team was ready and the process went smoothly,” said Jamaal Smith.

A message for policy makers and homebuyers

Historical discriminatory lending patterns, limited housing inventory and rising house prices put black buyers at a disadvantage. Tracking mortgage data is key to advancing and measuring the success of strategies and programs aimed at closing racial gaps in homeownership in the District of Columbia.

Fortunately, mortgage trends are published annually by the federal government. Additionally, elected officials, advocacy organizations, and regulators should publicly discuss the shortcomings. Such discussions will lead to more sustainable and affordable opportunities for black home buyers. In the meantime, while the population of black buyers is smaller and the barriers are enormous, some are achieving the American dream of homeownership.

McFarlane’s advice to potential buyers is: “Plan, stack your cash, figure out where you want to live, and be tough about it.” Personally, it feels good to have a place in DC that I know is mine.

Racial Disparity in Lending Chart for Washington, DC, 2020

Race Origins Refusal Refusal rate Total
White 16,227 1,740 7.66 24,357
Black 4,945 1,964 20.86 9,737
Hispanic 1,790 379 1:46 p.m. 2,993
Asian 1,779 284 10:40 a.m. 2,891
American by birth 64 7 8.97 82
Unknown 6,949 1,465 12.71 17,215

(HMDA data: analysis of federal home mortgage disclosure data provided by Compliance Tech)

Antoine M. Thompson is a housing policy expert, realtor at MMB Realty Group and former National Executive Director of the National Association of Real Estate Brokers (NAREB).