Black and Hispanic loan applicants have a harder time securing a mortgage and face a steeper climb to a full housing recovery than white and Asian homeowners, according to housing portal Zillow’s latest analysis of race and homeownership data.
Non-white loan applicants are denied FHA and conventional loans at far higher rates than white applicants. In 2013, 27.6 percent of blacks and 21.9 percent of Hispanics who applied for a conventional mortgage were denied, while only 10.4 percent of white applicants were denied.
In Boston, 7.1 percent of white applicants were denied conventional loans, compared with 22.8 percent of black applicants, 17.9 percent of Hispanic applicants and 9.9 percent of Asian applicants.
Black and Hispanic homeowners were hit hardest by the housing crisis, though home values in Boston fared somewhat better than in the rest of the country. Nationwide, home values in predominantly Hispanic neighborhoods fell an average of 46.3 percent from the pre-recession peak to the bottom of the market; in Boston that figure was 33.3 percent. Home values in predominantly black communities fell 32.1 percent, on average.; in Boston they fell 29.1 percent. Nationwide, home values in largely white areas fell 23.6 percent over the same time; in Boston they fell 16.7 percent.
Home values in both black and Hispanic communities nationwide also have farther to climb before getting back to peak levels. Home values in Asian neighborhoods are 9.6 percent above their peak levels. White neighborhoods remain 8.2 percent below their peaks. Home values in black communities are 17.9 percent from peak, and values in Hispanic neighborhoods are 24.2 percent below peak.
Boston, and in particular Boston’s predominantly black neighborhoods, fared somewhat better than the national average. Home values in majority white Boston neighborhoods have already risen 0.2 percent above their previous peak. Home values in Boston’s predominantly black neighborhoods are 1.9 percent below their previous peak. But home values in predominantly Hispanic neighborhoods continue to lag behind, currently 10.8 percent below their previous peak.
“While many of the disparities between the experiences of white communities and minority communities during the housing boom and bust can be explained by plain differences in finances and geography, it’s clear that the housing playing field remains strikingly unequal in this country,” Zillow Chief Economist Stan Humphries said in a statement. “Black and Hispanic applicants for conventional home loans make roughly $20,000 less per year than white applicants, resulting in much higher denial rates. Similarly, black and Hispanic communities are clustered in areas that saw huge run-ups in home values prior to the recession, and even larger drops during the crash.”
“But there are some reasons for optimism,” Humphries added. “Home values in black and Hispanic communities are expected to rise faster over the coming year, and the data shows that Federal Housing Administration-backed loans have proven to be a viable and critical source of financing in minority communities.”
