CLEVELAND — Anyone trying to buy a house right now can tell you it's a sellers’ market. Home sales and prices jumped again in January, continuing momentum gained in 2020.
When mortgage rates dropped to record lows during the pandemic, a lot of people saw their opportunity, but not everyone was able to compete. What’s good for the mortgage industry as a whole isn't necessarily good for Black Americans dreaming of owning a home of their own.
Monique Winston, president of the Cleveland Realtist Association, which works to increase the rate of Black homeownership, explained why the housing market is so hot right now.
“In 2020, interest rates were phenomenally low,” she said. “You have people literally trying to outbid each other.”
Winston said for the first time in her career, she saw people regularly involved in bidding wars to buy houses paying more than the asking price.
“You always have to look at the gap as a better gauge,” Winston said.
Last year, the 31% gap between Black and white homeownership that we saw in 2019 grew to 32%.
“When you look at the rate of Black homeownership, you’ve got to look at the things that people don't like to talk about, like the systematic things and the historical aspects of everything,” she said.
Winston was talking about policies like restrictive covenants and red-lining, policies that have had a lasting impact on generational wealth.
As a friend once told her, a head start beats a fast runner any day.
“If you have a 400-year head start and all things remain equal, you're never going to level the playing field,” Winston said, adding that the only way to start closing the gap is coordination between organizations like hers, legislators, credit counselors, and support from the faith-based community.
As for our hot housing market? Winston said it’s the result of low inventory combined with all these bidding wars, sometimes involving out-of-state investors looking to flip our homes for a profit. It's ringing some alarm bells.
“There are definitely some concerns about this, that not just the bubble bursting, but these prices, you know, are they true or are they inflated?” she said.
Winston says another trend keeping Black homebuyers out of the market is the growing number of sellers who won't accept FHA loans, which are common for African American applicants and first-time home buyers. She said what's happening with the housing market here is happening all over the country right now.