Key takeaways from the event, which featured data and anecdotes on the difficulties of being a Black homebuyer in America and expert advice on how Redfin agents can help make it easier.
Redfin held a symposium called Homebuying: The Black Experience on June 17, 2021 to educate its employees about how discrimination still holds back Black homebuyers today and how Redfin agents can better serve Black customers.
For Black Americans, buying a home is often a challenging experience, with Black house hunters facing higher barriers to entry than their white counterparts. One result of that is a significant racial homeownership gap, which is a key contributor to the racial wealth gap in this country. The Black homeownership rate was 45.1% in the first quarter of 2021, versus 73.8% for white Americans. The gap has hardly narrowed over the last 50 years.
One way for Redfin agents to help narrow the gap is to be aware that Black customers face discrimination and other challenges during the homebuying process, Redfin CEO Glenn Kelman said at the event. For instance, just as Black people need to work harder to achieve homeownership, their agents may need to work harder to help them buy a home. One tip for listing agents to run a fair process during a bidding war is to educate sellers on the possible fair housing implications of considering “love letters” from potential buyers. Agents should explain that sellers should consider offers based on objective criteria, such as price and terms.
During the event, expert speakers presented key data points and survey results around Black homeownership. A panel discussed the historical and current practices that have led to inequality in the housing market, along with possible solutions to help increase access to homeownership for Black Americans.
We put together a recap of key takeaways from the event below.
Black Americans face higher barriers to homeownership: Presented by Daryl Fairweather, Redfin’s chief economist
- The standard for becoming a homeowner is higher for Black Americans, which is part of the reason for the large homeownership gap. That notion is supported by findings from a recent Redfin survey on homeownership and race:
- Black homeowners are more likely than white homeowners to earn over $150,000.
- White homeowners are more likely to have parents or grandparents who are homeowners, meaning they often benefit from generational wealth that lowers the barrier to homeownership.
- Black homeowners are more likely than their white counterparts to have made a financial sacrifice to buy a home.
- For more on the survey findings, here’s a report detailing the numbers behind the trends mentioned above.
Your ZIP code is your destiny: Presented by Castleigh Johnson, CEO of My Home Pathway
- In America, a person’s race can impact where they live, which can also impact access to education, health care and income. Where you live matters.
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Example of two Chicago neighborhoods Chicago neighborhood Racial makeup Average life expectancy Median household income Median home value (with mortgage) Streeterville (60611 ZIP code) 73% white 90 $103,522 $535,100 Englewood (60621 ZIP code) 95% Black 60 $20,991 $115,400 The data in this chart is from Castleigh Johnson’s presentation during the Redfin symposium - There are many historical reasons for the measurable differences between primarily Black and primarily white neighborhoods, including predatory lending and historically racist housing policies like redlining.
- Strategies for narrowing the gap between Black and white homeownership include enhancing financial awareness and changing zoning policies to allow for the construction of additional affordable homes.
It’s more difficult for Black Americans to become homeowners: Presented by Bryan Greene, vice president of policy advocacy at the National Association of Realtors
- Greene presented findings from a recent NAR study about the profile of American homebuyers. Like Redfin’s survey, the study found that it’s more difficult for Black Americans than white homeowners to become homeowners. “Black people who succeed in buying a home have to be Superman or Superwoman,” Greene said at the event.
- Key findings from the survey:
- Just 5% of respondents who successfully buy a home are Black, while more than 80% are white.
- 30% of Black homeowners have advanced degrees, versus 24% of white homeowners. Meanwhile, 43% of Black homeowners have student debt, versus 21% of white homeowners. Those findings suggest Black homebuyers are held to a higher standard than their white counterparts, while at the same time carrying bigger financial burdens.
- Debt is a bigger barrier to homeownership for Black people. Ten percent of Black borrowers were rejected at least once before getting approved for a loan, versus 4% of white borrowers. Of those rejections, debt-to-income ratio was the reason for denial 59% of the time for Black applicants, versus 32% of the time for white applicants.
- The most important thing real estate professionals can do to help Black Americans buy a home is eliminate systemic barriers. Those include mortgage denials due to high debt and the fact that Black Americans have less wealth and less home equity. Without resolving those problems, the issues will compound and exacerbate the existing gap.
Black homebuying panel
Panelists:
Hazel Shakur, Redfin agent
Thomas Loving, cybersecurity professional
Brandon Avery, Marine Corps veteran and information research analyst, U.S. Dept. of Homeland Security
Kellie Hampton, mortgage sales support manager at Redfin
Below, we’ve included takeaways from the homebuying panel. The panelists’ quotes have been edited for length and clarity.
What people in the real estate industry need to understand about the homebuying journey for Black Americans: Racism and segregation still exist
Kellie Hampton: Numbers don’t lie. No matter how far we’ve come, it’s 2021 and Black people can get the degrees, make the money, do all the things you’re supposed to do, and sometimes it’s still not enough. People of other backgrounds may not understand that we’re still battling redlining and steering and flat-out racism.
Hazel Shakur: The quote “Your ZIP code is your destiny” strikes me. I bought a house years ago, and the same house in a primarily white nearby neighborhood sold for $150,000 more. I’m too heartbroken to even look at the difference in value between the two homes now. Plus, the quality of schools is worse in my neighborhood. I spend money sending my kids to private school. When you have to spend money on housing and spend money to send your kids to private school, you don’t have as much money to save and build wealth.
Just because certain Black Americans are successful doesn’t mean racism is over
Brandon Avery: Racism is not over. I’ve been “redlined” out of a community that was predominantly white. When I was renting in a primarily white community, I was mistaken for a delivery man while unloading groceries. Another time, I tried to buy a home in a primarily Black neighborhood and it was appraised for $50,000 less than the asking price. I was asked to pay $50,000 cash to make up the difference. When I turned that down, I was asked to perform labor to pay off the difference. I associate that with slavery and I don’t have the words to describe the anger, bleakness, sadness and fear that I felt.
Thomas Loving: It’s not an easy journey. I really struggled trying to get an offer accepted on a house when I arrived in Houston. I earn more than $400,000 a year, even without taking my spouse’s income into account, and I was in a position where I had to jump through hoops to prove that I could afford even a starter home. It absolutely is different when you’re a person of color. It was outrageous. Black homebuyers are the exception, not the standard, and people often assume we can’t afford to buy a home even when we have successful careers and earn high incomes.
How real estate agents can ensure bias isn’t hurting Black customers: Put yourself in customers’ shoes, listen and learn
Hazel Shakur: Recognize that you yourself are probably walking around with implicit bias. Put yourself in the other person’s shoes: Is something I’m doing or saying going to hurt them in any way? Take the time to pause and reflect. Act in a way that reflects your true values, both as a person and as a real estate agent.
Kellie Hampton: Think before you speak. Bias can be so intrinsic and so implicit that we don’t think it’s a big deal. Do a little work when you recognize these things within yourself. Google is your friend. If someone says something and you don’t know what it means, look it up or ask someone.
What Redfin can do to make homebuying better for Black homebuyers: Pay attention, stand up and fight, be a cheerleader, educate
Thomas Loving: Get to know the individual person. Pay attention. What do they want? What are they looking for? Stand up and fight for your client. If you hear someone say something to your client that you wouldn’t like said to you, stand up and say something.
Hazel Shakur: Start with your attitude. Be mindful of the important role you play in helping a Black client achieve their dream of homeownership. For buy-side clients right now, getting an offer accepted is a chore. You have to be a cheerleader for your client. Black buyers may have to go above and beyond what their white counterparts do in order to even get a loan.
Kellie Hampton: From a mortgage standpoint, I have learned that many Black people don’t know how mortgages work. There’s a lack of education and a lack of representation. Education is a huge piece. Not everyone will qualify for a conventional loan, but there are options like FHA loans, so be sure to present all options. Just because you don’t have a 760 credit score doesn’t mean you’re not worthy of owning a home.
Hope for future generations of Black homeowners
Brandon Avery: Redfin’s investment in educating agents about helping their Black clients will help them serve members of the Black and BIPOC communities. Outside of this symposium, I recently ran into a Caucasian couple and they were well-versed in a lot of the voting restriction policies going on in different states. They were passionate about those policies and knew about how they could restrict voting rights and restrict access for African Americans to valuable properties in certain neighborhoods. That experience touched me and gave me hope for the future.
Kellie Hampton: I’ve been with Redfin for four years, and it’s part of our culture to have the tough conversations and not be afraid to tackle the tough topics. We can get so bogged down with numbers and the day-to-day, it’s easy to forget that sometimes, we’re helping people change their lives. Some folks are the first people in their entire family to ever own a home. Others used to be homeless and now they’re homeowners. That gives me hope.
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