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African-Americans, Hispanics Increasingly Pushed From the Housing Market

You know your ability to buy and keep a home is influenced by financial factors like income, equity and credit history. But a recent study suggests that there’s another element at work.

According to a new study by Zillow and the National Urban League, ethnicity may play a significant role in one’s success – or lack thereof – in the housing market.

It turns out that African-Americans are less likely to apply for a mortgage than white Americans - and, if they do apply, are 2.4 times more likely to be denied the loan.

Perhaps as a result, just 43 percent of African-Americans currently own homes, compared with more than 73 percent of Caucasians. Hispanics are also far less likely to experience home ownership, with just 47 percent owning their own properties.

Minorities don’t just have difficulty entering the real estate market; once they get there, they have trouble staying. African-Americans and Hispanics tend to have a higher percentage of their wealth tied up in their homes: Since the housing bubble burst, Hispanics lost on average 32 percent of home value, African-Americans lost 23 percent and whites lost just 13 percent.

One very important factor the study failed to acknowledge was credit. As a result, it’s impossible to pinpoint just how much of the participants’ struggles were due to pre-existing financial conditions vs. flat-out racial profiling.

One explanation is fallout from the housing crisis, when high-interest-rate subprime mortgages were handed out to minorities at a disproportionate rate. As a result of these bad loans, certain ethnic groups were more likely to default and lose their properties to foreclosure.

Now, these same groups are struggling to recover from ensuing bad credit. For many, it’s been a steep uphill climb.

If you’re running into roadblocks while trying to buy a home for whatever reason, your best bet is to focus on rebuilding credit. By reducing debt, making credit payments on time and staying well under your limit, your credit score – and your chances of snagging a good mortgage – will eventually rise.

If crushing debt is keeping your credit low, bankruptcy can be the most effective way to break free and take advantage of a fresh start. Bankruptcy isn’t exactly easy, but it remains the most powerful tool for making a lasting financial change.

It’s inexcusable for lenders to deny mortgages based on stereotypes, though some still do. But while we can’t control the behavior of lenders, we are still in charge of our own actions. With the right bankruptcy plan and support from an experienced bankruptcy lawyer, a better financial future can be within your grasp – no matter what the statistics say.

Contact DebtStoppers today to schedule your free one-on-one debt analysis with one of our knowledgeable bankruptcy attorneys.

Resources:

African-Americans Squeezed Out of Housing Market, by Les Christie, CNN Money

 

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