Challenges For Black Homeowners and Buyers – and How Real Estate Agents Can Help

The most recent National Association of Real Estate Brokers’ (NAREB) State of Housing in Black America (SHIBA) Report found that Black Americans are under-represented among owner households as they continue to face barriers stemming from cumulative disadvantage and structural inequalities. In the second quarter of 2020, the homeownership rate was 47% for Black households and 73% for White households. Although there was a recent uptick in Black homeownership – due in part to low interest rates and a strong economy – that trend has now halted, perhaps as a result of the COVID-19 pandemic and its far-reaching and devastating effects, particularly to the Black community.

“The mission of the SHIBA Report is to highlight barriers that affect the Black community in relation to homeownership as well as provide education and solutions to help overcome these obstacles,” says Avery Ruff of RE/MAX of Cherry Hill and President of the Southern New Jersey Chapter of NAREB.

“It is important for real estate agents to read the SHIBA report in order to educate themselves in understanding and navigating barriers to homeownership in the Black community,” Ruff adds. “Having an understanding of the greater challenges in these areas helps the real estate community assist homebuyers in navigating the complex process of owning a home.” The many barriers faced by Black and minority families when it comes to homeownership largely stem from racial gaps in income and wealth, which are heightened by disparities in the rate of mortgage loan denials compared to white borrowers. However, despite these challenges, the SHIBA Report aims to highlight and remind readers of the significant untapped opportunities for Black homeownership.

Outlining a set of recommendations for impactful public policy interventions that could help close the homeownership gap, the report notes “the adoption of substantial, immediate, multi-level, and coordinated policy interventions directed towards boosting homeownership could ‘save the day’ by driving economic growth and opportunity for Black households and families.”

According to the report, Black workers have experienced higher rates of job loss and unemployment during the pandemic and Black-owned small businesses have been less likely to survive. The report continues, “These economic shocks have had differential effects on the ability of households to make timely mortgage payments.”

Ruff has witnessed firsthand the negative impact COVID-19 has had on the Black community.

“I have seen a significant decrease in home purchases,” Ruff says. “This decrease is attributed to lack of inventory and/or an increase in unemployment during the pandemic.”

For the future, Ruff hopes to see a continuation of increased homeownership programs and initiatives such as the Cares Act, a continuation of the forbearance on mortgages to stop foreclosures, rent relief for renters, and a cancellation of student loan debt.

“All of these initiatives would impact the process and allow for a continuation in the right direction of increased homeownership in the Black community.”

The report identifies 14 policy recommendations intended to address the current and systemic issues facing Black homebuyers (the full policy recommendations can be found beginning on page 68 of the report). Of the 14, below are the policy recommendations real estate brokers and agents can specifically adopt and incorporate into their businesses.

1.     Real estate professionals should leverage their influence to demand that industry participants comply with Fair Housing or other laws that affect Black communities.

2.     Increasing diversity in the real estate and mortgage industry, especially in senior leadership, and encouraging minority business utilization will improve performance.

The report cites research that found in addition to increasing representation of Black professionals to reflect the characteristics of the markets served by the industry, there is evidence that diversity in leadership correlates with positive impact on organizational performance.

Weeks after the SHIBA report was released, the National Association of Realtors® (NAR) for the first time issued a formal apology for past policies that contributed to segregation and racial inequality nationwide during their annual conference. Newly-installed NAR President Charlie Oppler said in the apology, “What Realtors® did was an outrage to our morals and our ideals. It was a betrayal of our commitment to fairness and equality.”

Added Oppler, “We can’t go back to fix the mistakes of the past, but we can look at this problem squarely in the eye. And, on behalf of our industry, we can say that what Realtors® did was shameful, and we are sorry.”

On the heels of the apology, the trade organization announced the release of a new interactive training platform designed to help combat discrimination in America’s real estate market – made available at no cost to real estate professionals throughout the country. The immersive simulation, dubbed Fairhaven, provides an exercise to agents wherein they work against the clock to close four deals, confronting various scenarios where discrimination enters into the transaction. According to NAR, the training also provides “customized feedback to help real estate professionals incorporate fair housing principles in their daily interactions.”

“The Fairhaven simulation is a real eye-opener. The simulation is crafted in such a way that agents can choose different paths,” says Sam Olson, leader of the Olson Group at RE/MAX Gold, who recently completed the training. “Each answer provides a different set of new questions. It’s full of nuance and gray area, and I think THAT is what makes it so important – it exposes the quiet ways housing discrimination can sneak into our transactions and it shows that sometimes our best intentions are not the correct answers.”

Added Olson, “It’s real, and that’s why it’s good. Fairhaven is a great supplement to the “People Will” campaign NAR launched this summer. I wholeheartedly recommend that everyone take this course, with no expectations beyond self-discovery.”

NAR members can navigate to https://fairhaven.realtor and log in with their NAR single sign-on credentials to launch the platform for free. The training takes 60-100 minutes to complete, depending upon the learner’s performance. Fairhaven is also available as a software package for brokerages and associations to run on their own Learning Management Systems.

In a previous RE/MAX News interview with Donnell Williams, President of NAREB, Williams stressed that the lagging rates of Black homeownership are not a problem of the past and that it’s in front of us now.

According to Olson, fair housing education and compliance is a responsibility of all Realtors to ensure that housing is available to everyone on an equal footing, without fear or discrimination.

“It’s important to have fair housing education in the ongoing education curriculum because our responses to discrimination have to evolve with the times, just like our real estate practice does. There is a societal shift going on, and it is toward inclusion and celebration and equal access, and our industry can help lead the way in opening opportunities for every person to thrive.  But we have to know how to do it the right way, the fair way, the equitable way,” he says.

“This may be one of the most important trainings I have ever taken,” Olson says.

RE/MAX CEO Adam Contos told the RE/MAX network in 2020, “The greatest thing a leader can do is inspire change. We do that through our voices, our positions on issues – and that’s what we’re here for.”

As a global real estate franchisor with a footprint spanning more than 110 countries and territories, RE/MAX has long taken pride in being the home of top producers working to help as many people as possible achieve homeownership. Understanding the existing barriers, the root cause of these disadvantages and the role public policy in the real estate industry can play to address these challenges is paramount to the success of making homeownership an attainable reality for everyone.

More information about NAR’s commitment to fair housing can be found here.

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