Recently, the New York State Attorney General Letitia James concluded that People of color in the state are less likely to own a home, more likely to be denied a mortgage, and face a higher borrowing cost. With this comes a large racial wealth gap because real estate is a great investment that leads to more returns for taxpayers over time when done properly. When this disparity happens, it becomes financially harder for communities of color and systemic discrimination develops in the housing market.
I grew up in a New York City (NYC) neighborhood that was predominately Black and Brown; I enjoyed my childhood and wouldn’t trade my neighborhood for the world. Now here we are 30 plus years later and this same neighborhood I grew up in is now a community more diverse than I could have ever imagined due to gentrification. Gentrification can be defined as poorer urban areas being changed by wealthier individuals coming into the neighborhood buying homes and bringing businesses which often leads to a rise in cost and the original inhabitants being pushed out following the change.
As I mentioned previously, I loved my neighborhood flaws and all, but unfortunately after going to college and establishing a career, the area went from lower and middle-class families living comfortably to one where mostly the higher end of middle class are comfortable. The rent prices for a studio in nicer “affordable” units ranged from $1700 to $2200 monthly based on a $50K plus annual income. For single-family homes prices started at $600,00 to $800,00 and to buy a multi-family home prices started from $900,000 to $1-2 million. I refused to pay mortgage prices for rent, so my mission became to buy a condo and with these cost I was able to stay in NYC but had to leave my neighborhood behind.
My debt-to-income ratio due to my student loans initially affected my loan approval even without an outstanding credit card debt and less than $4000 left on financing my car. It is public knowledge that Black and Brown people often come from lower income households and are more likely to have student loans, so the student loan debt crisis is a problem on its own, and when you factor in discrimination in home ownership this is truly disheartening in trying to create the “American dream.”
If it is your goal to purchase a home when the market works for you, the best thing to be done is to Educate yourself and your family on home ownership and money management because there have been families who lose generational homes due to mismanagement or had to sell to get out of debt. There are many avenues to get information whether online or in person at events and below you will find some information.
Resources
Bank of America Homeownership Commitment
U.S. Department of Housing and Urban Development
National Fair Housing Alliance