An Analysis of the Racial Homeowning Gap

Did you know that April is Fair Housing Month? Seems like the ideal time to discuss the discrepancy of the Florida home loan market and other obering realities of housing in America.

As Hurricane Katrina demonstrated, incidents of housing discrimination still abound. The homeownership divide between blacks and whites is strikingly wide. Meanwhile, housing has become less and less affordable in most major metropolitan areas.

The reported incidents of housing discrimination increased significantly around the nation, as well. Ideally, anyone would be eligible for a Florida home loan, but consider the following:

There were 8.6 percent reported cases from 2003 to 2004, according to the National Fair Housing Alliance. The number of cases reported to state, federal and nonprofit agencies climbed from 25,148 in 2003 to 27,319 in 2004. But last year, at least, the number of incidents dropped slightly, with 26,092 complaints in 2005.

In late March, the National Urban League’s report, “The State of Black America 2006,” found that 50 percent of blacks own their homes compared to 70 percent of whites.

A major reason for this disparity is racial segregation, says Lance Freeman, assistant professor of Urban Planning at Columbia University. Many middle-class and homeowning blacks live in neighborhoods that are overwhelmingly black, where poverty rates are higher and where amenities and services are lower than for middle-class, homeowning whites.

This, he says, reduces the chances of blacks to build equity with their properties, and it impedes wealth creation.

Because many black home buyers seeking a Florida home loan or other mortgages are turned away when trying to borrow from conventional lenders, they are often susceptible to predatory lenders.

These high rates make it difficult for many blacks to meet their mortgage payments. They are often stuck with Florida home loans whose monthly bills add up as years go by.

Predatory lending is rampant in minority communities. Blacks and Hispanics are disproportionately represented in the sub-prime home-finance market, which means they are paying several more percentage points in interest than what their white counterparts pay.

As a nation, we lose more than an estimated $9 billion per year because of predatory loans, according to the Center for Responsible Lending. State and municipal legislatures all across the country are passing laws and ordinances to try to address this serious housing issue.

Likewise, the issue of affordable housing is in need of immediate attention and reform.

As gentrification continues to skyrocket in many major metropolitan areas, the costs of rental properties are increasing and homeownership is becoming more and more out of reach for many Americans.

Steps need to be taken to address this issue. There are many potential buyers that simply can’t afford current home prices in the state - hopefully more plans for affordable, reasonable Florida home loans will be in the works.