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National Mortgage Professional
Sep 21, 2005

Urban minorities experience severe homeownership affordability problems, Fannie Mae research concludesMortgagePress.comMinority housing,Fannie Mae Foundation On June 23, the Fannie Mae Foundation released research showing that one in seven African-Americans and one in eight Latinos living in the 25 largest cities across the nation spent at least half of their incomes on housing during the 1990s. Census Note 14--A Tale of Two Cities: Growing Affordability Problems Amidst Rising Homeownership for Urban Minorities--uses census data to examine recent trends in homeownership attainment and affordability among urban minorities. Census Note 14 examines changes between 1990 and 2000 in homeownership rates and severe owner cost burdens (defined as spending at least half one's incomes on housing) among blacks and Latinos living in the nation's largest cities. The research compares trends for urban minorities with changes for urban whites and national trends. "The good news is that the last decade was one of the best for minority homeownership in American history," said Stacey D. Stewart, president and chief executive officer of the Fannie Mae Foundation. "The bad news is that the gain in minority homeownership rates during the 1990s was associated with a pronounced rise in the share of severe affordability problems for minority homeowners." The combined figures for the cities examined indicate that while the number of Black homeowners expanded by 16 percent between 1990 and 2000, the ranks of Black homeowners paying at least half of their incomes for housing grew by 39 percent. Similarly, an impressive 54 percent gain in the number of Latino homeowners was overshadowed by a 98 percent jump in Latino owners with severe affordability problems. The findings also reveal that: †Fully one in five black and Latino homeowners in Los Angeles paid half or more of their incomes for housing in 2000. Among the nation's 25 largest cities, only New York City's minority homeowners experienced comparable rates of severe affordability problems. †In Washington, D.C., the number of severely cost-burdened black homeowners increased by more than 50 percent between 1990 and 2000. In fact, the nation's capital ranked fourth in the percentage increase in the likelihood of black homeowners experiencing a severe cost burden. Among the nation's largest cities, only New York, Los Angeles and Seattle exceeded Washington, D.C. †Philadelphia added more than 7,000 Latino homeowners during the 1990s, an increase of 60 percent. But the number of Latino homeowners with severe cost burdens increased by 167 percent. As of 2000, 19 percent of the city's Latino homeowners spent at least half of their incomes on housing. Only Los Angeles and New York City had higher rates of affordability problems among Latino owners. †In Baltimore, rapid growth in severe affordability problems accompanied a substantial increase in Black homeownership. Black homeowners with severe cost burdens increased by 75 percent during the last decade, more than three times the pace of overall Black homeownership growth. †In Memphis, there was a 40 percent growth in black homeownership during the last decade. Unfortunately, the city also registered a 71 percent increase in the number of black homeowners paying at least half of their incomes for housing. Between 1990 and 2000, the number of black homeowners with severe affordability problems increased by 4,000 in Memphis. †Charlotte, N.C.'s 66 percent increase in black homeowners far outpaced black homeownership growth in any other large American city. However, black homeowners paying at least half of their incomes for housing grew by a much faster rate of 140 percent. †Between 1990 and 2000, San Diego added 27,000 homeowners. Latino homeowners accounted for more than one quarter of this number. Unfortunately, the number of Latino owners paying at least half of their incomes for housing doubled during the decade. "The rapid growth in severe homeowner affordability problems among urban minorities threatens to undermine homeownership gains among minorities during the 1990s and also threatens the health of our urban neighborhoods," said Stewart. "The Fannie Mae Foundation supports emphasizing early detection and remediation of mortgage repayment problems, property tax relief for low-income homeowners, homeownership and financial education and counseling, and actions designed to curtail predatory lending." This latest research reinforces previous Fannie Mae Foundation research findings on growing affordability problems for American households. For more information, visit www.fanniemaefoundation.org.
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