One result of this pandemic housing boom is a widening homeownership gap. Brokers can help ensure equitable access to the benefits of homeownership. Taking a step back, even before COVID-19 hit and the economy went into recession, African American and Hispanic households were less likely than White households to own a home. As the housing market has boomed during the pandemic, the homeownership divide has widened. Limited inventory and soaring home prices, along with persistent implicit and sometimes explicit discrimination in the housing market, have made it harder for African American and Hispanic families to realize the benefits of homeownership. It is important for REALTORS^® to ensure that the home-buying process is equitable and to help expand homeownership opportunities.

Booming Housing Market, Widening Homeownership Gap

Non-White individuals and families have faced greater challenges than Whites during the pandemic and economic downturn, including bigger obstacles to homeownership.

The residential real estate market—particularly the for-sale market—has been booming during the COVID-19 pandemic. Low mortgage rates and the demand for more space have fueled a surge in sales activity. In Virginia, the number of home sales snowballed in the second half of 2020, home prices have been up by double-digit rates, and there is currently only about 1.5 months of supply statewide.

The hot housing market has led to intense competition for homes, with bidding wars, all-cash offers, and appraisal and home inspection waivers. Many potential home buyers are being left out, including many African American and Hispanic home buyers in Virginia. The booming COVID-19 housing market is leading to an ever-widening disparity in homeownership rates.

African American and Hispanic homeownership rates are significantly lower than White homeownership rates. While the White-Hispanic homeownership gap in Virginia has narrowed somewhat in recent years, the disparity in homeownership has increased for African Americans. The COVID-19 housing market has reinforced and intensified those disparities.

According to the National Association of REALTORS^® Snapshot of Race & Home Buying in America and research conducted by Virginia REALTORS^®, there are several factors contributing to the persistent homeownership gaps:

• Incomes are lower for African American and Hispanic households, making affordability a greater challenge. In Virginia, 62% of White households and 71% of Asian households can afford the typical home. By contrast, only 55% of Hispanic households and 44% of African American households have incomes sufficient to afford the typical home in Virginia.
• Student debt creates obstacles to homeownership. Black households are more than twice as likely than White households to have student loan debt (43% versus 21%). The median student loan debt for Black households is $40,000 compared to $30,000 for White households.
• Access to financing is another hurdle to homeownership. In Virginia, African Americans and Hispanics were denied mortgages at rates more than two times greater than for Whites. The mortgage denial rates in Virginia in 2019 were 11.9% for African Americans, 9.6% for Hispanics, 8.5% for Asians, and 5.0% for Whites. Differences in denial rates persist even for households with similar incomes.
• Discrimination in the housing market still exists. Despite the fact that the Fair Housing Act was passed more than 50 years ago, there is still both explicit and implicit racial bias in real estate transactions. Nationally, NAR reports that 7% of African Americans, 5% of Asians, and 1% of Hispanics who bought homes last year experienced racial discrimination in their real estate transaction.
• Implicit bias is much more common than explicit racial discrimination. According to NAR, more than a third of home buyers nationally experienced “steering” by their real estate professional, where they were directed to view homes in some neighborhoods and not others based on assumptions that were either directly or indirectly tied to race, ethnicity, or some other demographic characteristic.

These obstacles to homeownership have gotten worse during the pandemic. African American and Hispanic households with lower incomes, lower credit scores, and bigger financing challenges have a hard time competing in this frenzied market. Implicit bias, and even explicit discrimination, still exist, putting these buyers at a further disadvantage, contributing to the widening homeownership gap.

What Brokers Can Do to Promote Equitable Access to Homeownership

Brokers are on the front lines of promoting homeownership. There are many resources from the National Association of REALTORS^® that Brokers can make available to their agents to help increase education about fair housing and to ensure equitable access to housing:

• NAR has published guidelines for fair housing compliance during COVID-19, which reviews fair housing laws and provides guidance for how REALTORS^® can help individuals and families find homes during the pandemic.
• NAR’s At Home With Diversity^® certification is designed to help REALTORS^® understand how to work successfully in the changing multicultural market.
• Launched last year by NAR, Fairhaven is a fair housing simulation training to help REALTORS^® better understand and be aware of discrimination in the housing market.
• In 2019, NAR worked with the Urban Institute and the National Association of Real Estate Brokers to develop a five-point plan for addressing the African American homeownership gap.