Home ownership among Blacks, Latinos slides in South Florida
Kevin Rutledge Jr. grew up in the four-bedroom home in Miami Gardens where his parents still live today. He and his siblings spent long hours in the den, watching movies and playing board games, providing a sense of stability that Rutledge wants for his own family.
In August, he’ll close on a three-bedroom, two-bathroom house with a good sized yard and palm trees in the Norwood neighborhood of Miami Gardens. A nearby park and pool will help him keep his 12-year-old son busy.
“It’s important for me to leave something behind, whether it’s a business or some type of legacy,” said Rutledge, who works as a corrections officer for the Miami-Dade County Department of Corrections. “With the home, I’ll leave that to my son and when I’m not here he can decide what to do with it.”
Rutledge, who is Black, is bucking a trend. While owning a home is considered one of the most effective ways of building wealth, the high cost of South Florida housing has taken a toll on home-ownership rates. But the rates for Blacks and Latinos have dropped twice as much as whites, according to a new study by online brokerage Redfin.
While home-ownership grew nationally over the period 2012 to 2018 for whites, Blacks and Hispanics saw a decline. In South Florida, home-ownership contracted for all groups — by 4% for Blacks, from 49% to 45%; by 5.2% for Latinos, from 56.8% to 51.6%, and by 2.1% for whites, from 75.6% to 73.5%.
The increase in residential prices and tight incomes are key contributors, said Ned Murray, associate director of the FIU Metropolitan Center. “The Black community was doing better in terms of salaries prior to the pandemic. The Great Recession hit and the county did not recover until 2012. These communities never recovered.”
Sign Up: Re | source
Whether you’re a real estate professional or simply an aficionado, the Miami Herald’s new RE | source newsletter is your link to residential, commercial and industry news.
The economic fallout from COVID-19 will likely exacerbate the situation, Murray said. “We’ve lost income now. That’s going to make it more difficult to save, and we know that job loss is going to continue into the fall.”
South Florida’s home-ownership racial divide falls in the mid-range of metro areas studied. The greatest divide is in Minneapolis, home of George Floyd, where only 25% of Blacks own homes versus 76% of whites. It is followed by Grand Rapids, Mich., where 33% of Blacks own homes versus 78% of whites, and Salt Lake City, where the gap is 28% versus 72%
The gap between Black and white home-ownership is only slightly larger in South Florida than in San Francisco, with 33% Black home-ownership versus 61% for whites, and Philadelphia, with 48% home-ownership among Blacks and 76% for whites. The metro area with the smallest gap is Washington, D.C., where 51% of Blacks and 72% of whites own homes.
Washington was the only one of the 53 metros in the study where Black home-ownership was higher than 50%. The study examined metros with population of more than 1 million. It defines the Miami metro as the area south from Port St. Lucie to Key West.
The ramifications extend beyond housing.
“The home-ownership gap between Black and white families is a problem that extends far beyond the realm of housing,” said Redfin economist Taylor Marr in a release. “The value many Black families have missed out on because they were impacted by systemic racism in housing could have been passed down to children and grandchildren, paying for things like higher education, childcare, starting a business and down payments on their own home. Instead, younger generations in the Black community are at an unfair financial and social disadvantage.”
Tiffany Offord, 39, grew up in rented homes, and for the past decade, she and her husband Reginald, a 54-year-old retired law enforcement officer, have rented since selling a home they built in the Redland to be closer to the city.
Offord has been on the hunt for a “forever home” since March, but it’s proven difficult. Beyond the challenges of navigating a seller’s market, Offord said there are historic barriers that stand in the way for people of color.
“I know I jumped through a lot of hoops as a person of color and I’ve seen non-people of color that don’t have to do all that,” said Offord, who works for the county’s aviation department.
Owning their own home will help ensure her children have advantages she didn’t have but that many white families were born with, Offord said. While some families can hit the ground running by inheriting land, homes and businesses, she said, it’s a different story for Black and brown people.
“People of color have always had to struggle to provide for their families because we’ve always had to take jobs where we made the least amount,” Offord said. “We were never able to get ahead or to own because we always had another obstacle put in our way outside of our skin color.”
The combination of high housing prices and historically low wages are added roadblocks for South Floridians.
“One of the bigger challenges [in South Florida] is the lack of inventory for single-family homes below the threshold of about $230,000,” said Kimberly Henderson, president and CEO of Neighborhood Housing Services of South Florida, a HUD-certified housing counseling agency that promotes home- ownership among the less wealthy and communities of color.
The vast majority of its clients earn about $40,000 or less. The inventory at that price point is very limited, said Henderson.
“Most of our clients, we pre-approve for under $150,000. So the only way they’ll be able to purchase is if they’re able to find one of the few and rare houses that are priced below that or if they have access to substantial down payment and closing cost assistance through programs with the county or the city of Miami,” Henderson said.
Often those programs run out of money or they take a while to process payments added Henderson, which makes the buyers less competitive.
“We want to look at ways to put our buyers at an advantage,” Henderson said. “That means we have to have enough down-payment assistance to fill the affordability gap. That assistance has to be flexible and it has to be deployed quickly, particularly in a seller’s market, which we’re in.”
High down-payment requirements are also an issue, said Jorge Guerra Jr., chairman of the Miami Realtors Association. “There are two main issues: A lot of what we have are condos in South Florida. That product was taken away with many not being approved for FHA financing. The second issue is that we had huge amounts of funds coming from New York and elsewhere that bought up these homes where someone could put a 5% down. These local buyers were competing with all-cash deals.”
And offers from buyers with FHA loans designed for low- to moderate income borrowers often get pushed aside in favor of offers from buyers with conventional loans, according to Jeff Corriolan, president of the National Association of Real Estate Brokers and a realtor at Keyes. “There’s a stereotype out there that believes that conventional buyers are better buyers,” he said.
That’s not necessarily the case, he added, pointing to his experience with buyers who may qualify for conventional loans but opt for FHA loans because they may provide more favorable rates.
“Realtors out there need to get educated as professionals to know what programs are out there and not look the other way,” Corriolan said. “And clients need to attend courses so they can fully understand home-ownership. It goes back to educating the public.”
Minorities want to buy
Despite the challenges, minorities continue to express interest in home-ownership, said Teri Williams, president and COO of OneUnited Bank, the nation’s largest Black-owned bank. Over the last few months, OneUnited has seen such an influx of home loan applications that the bank is hiring an additional loan processor.
“I think that one of the things that we’ve been doing and that needs to be done is to educate the community about these programs,” Williams said. “A lot of folks just don’t believe that the programs are real and attainable.”
A monthly club for first-time home buyers that previously met in person is now held via video conferencing. While the in-person meetings attracted around two dozen people, the virtual meetups have drawn about 100 attendees. The move has been so successful that Williams said the club will continue to meet via video after the pandemic subsides.
One of the challenges for communities of color is that some people struggle with criteria such as credit scores and debt-to-income “because we tend to have more debt and less income,” Williams said. It may be time to reevaluate some of those measures, she added.
“It’s unclear whether debt-to-income is a good indicator of whether someone will pay their mortgage,” Williams said.
But like Henderson and Murray, Williams said one of the greatest hurdles is supply.
“We need more affordable homes in Miami,” Williams said.
What are the solutions?
Creative solutions, said Henderson, include condominiums, which can be a starter home for buyers. But condos also come with challenges: condo fees can throw off debt-to-income ratios, making it difficult for buyers to qualify.
“I believe we have a crisis of financial illiteracy in this country across all communities, races and income strata,” Henderson said. “We see it with payday lending, we see it with student loan debt, with identity theft – we see it across all spectrums.”
Unconscious bias also plays into the rates. “The industry will say ‘we don’t discriminate, we have a rate sheet,’ ” Henderson said, but that doesn’t account for bias from the person reading the rate sheet, she noted. Additionally, consumers may not even know what questions to ask if they are first-time buyers, said Henderson.
Working with Realtors who are empathetic can also go a long way, noted Offord, who said she’s faced racism in the search for a home.
“You have to go find a Realtor that represents you and that aligns with your values and can understand” what you’re going through, she said.
Another piece of the puzzle is a lack of savings. Even when buyers access programs that allow them to contribute little to no down payment, a lack of savings means they are entering home-ownership with very little equity or skin in the game, Henderson said.
“We promote home- ownership, but we promote it responsibly and we want people to stay in their homes through pandemics, through hurricanes and all sorts of crises,” she said.
Her agency received funding from Capital One Bank to beef up its counseling services in the fall. The goal is to provide more intensive coaching to help people improve their credit, reduce their debt and increase their savings.
Private-public partnerships can be another force for change, Murray said. One example, Murray said, is the economic development agency ban on chokeholds in West Palm Beach. Miami-Dade, Broward and the City of Hialeah have followed suit.
“Municipalities have to be the force for the community development system. We are all focused on the pandemic and Black Lives Matter. Now that we have the focus, this is the time for policy. We have to figure out these public-private partnerships within defined municipalities. It may not be city or countywide, it can be neighborhood based,” Murray said.
Congresswoman Donna Shalala is also taking action on minority home-ownership.
Last year Shalala led a Florida delegation demanding that Freddie Mac and Fannie Mae change condo-lending practices in the state to allow buyers to give the 10% down payment permitted in all other states. In July, she voted for the Moving Forward Act, a $1.5 trillion infrastructure plan that includes $100 billion for preserving 1.8 million affordable housing multifamily developments. The bill passed in the House of Representatives and is now moving on to the Senate, where passage in the Republican-controlled chamber is unlikely.
For Offord’s family, help can’t come too soon. Over the past four months they’ve made three offers.
“It’s been very frustrating and difficult to say the least,” Offord said. “It’s not a buyer’s market. We’re faced with homes that don’t have what we’re looking for or the space we need and that to me are overpriced.”
On a recent Thursday, they were back at it. This time, they ventured north to Davie, following the trend of Miamians willing to trade a longer commute for Broward’s more affordable housing market.
