NAREB Releases 2021 State of Housing in Black America Report

The National Association of Real Estate Brokers (NAREB) released its 2021 State of Housing in Black America report last month, and while the homeownership rate for Blacks continues to lag behind that of other racial groups, the COVID lockdown and related economic stimulus payments to all Americans seem to have played a factor in driving the nationwide Black homeownership rate to 45.3 percent by the end of 2020 – a nearly five percent increase from the rate at the end of June, 2019. We sat down with Cameron Perket, incoming president of NAREB’s Twin Cities Chapter, to discuss the report and learn more.

Perket is the CRA Branch Manager for a major Twin Cities bank’s mortgage lending operations. “The increase tells me that Black renters want to achieve homeownership,” he says. “With the help of COVID stimulus money, many were suddenly able to afford the entry costs involved. That’s a good thing, however it also shows that many Black households aren’t putting money aside outside of such windfalls. This demonstrates to me the need for better financial literacy among Black households, and we need to figure out how to achieve this if we want to see continued progress against the racial homeownership gap. Remember, the Black ownership rate for Minneapolis is still one of the lowest in the country at just 25 percent.”

The NAREB report contained many other notable statistics and findings, including:

• Black homeowners were about equally likely to enter mortgage forbearance as other homeowners that missed mortgage payments.
• In 2020, 42 percent of Black borrowers applied for an FHA mortgage, a rate nearly three times that for White applicants (15 percent).
• There has been a 33 percent increase in mortgage applications from Black millennials since 2018, compared to a 14 percent increase among White millennials.

“The highlight of the report for me,” says Perket, “is the increase in Black millennials moving into homeownership. I’m a millennial myself. This is great news, and we need to keep this momentum going. We need to reach these individuals early, and show them the wealth-building potential of homeownership and how it positions you for success within our financial system.”

Regarding the statistic on FHA borrowing, Perket sees this as an area where discrimination could play a role if certain changes aren’t made to the mortgage underwriting system. “Mortgage lending criteria were tightened up at the beginning of COVID,” he says, “and that was entirely appropriate. FHA-insured loans were created precisely for a scenario like this, allowing less financially well-off households to still be able to achieve homeownership. But when it comes to discrimination, sellers and real estate professionals may choose to steer clear of FHA transactions due to the more complicated approval process, or even due to outright discrimination against a borrower who needs to rely on this tool.” Perket adds, “In my opinion, and in the opinion of NAREB and many others, the type of financing a borrower is using to purchase their home is not relevant to the seller and should not be included in the data they receive.”

Perket goes on to list several additional reforms needed to prevent lending discrimination, including: 1) Making “love letters,” or letters from prospective buyers to sellers discussing why the seller should choose their offer over others, inadmissible; 2) Removing buyers’ names from the purchase agreement; and 3) Removing information regarding the use of down payment information from the purchase agreement.

As for his plans while leading NAREB’s Twin Cities chapter during 2022, Perket plans to focus the group’s efforts on bringing financial literacy resources to local high schools, promoting the consideration of non-traditional credit factors like rent and cell phone service payment histories, and recruiting young Black individuals to the real estate industry. “We need to have more people in the industry that look like us if we want to see it continue to evolve beyond it’s past,” he says.

The full 2021 State of Housing in Black America report is available online.