For generations, homeownership has been touted as a pathway to the American Dream. But, is reaching the dream a reality for everyone?
Dr. Courtney Johnson Rose, president of the National Association of Real Estate Brokers (NAREB), says systemic racism has held back Black families from owning a home.
Challenges to saving for a down payment impact Black people because of the racial wealth gap. These stem from gender-based pay gaps and lack of inheritance, which are pillars of wealth-building opportunities, Rose said. For example, Black women earned 66.5 cents for every dollar earned by white men in 2022, per data released by the Institute for Women’s Policy Research.
Yet homeownership remains a powerful tool for generational wealth, and it begins with seeing your house as not just a place to live but also a financial asset to leverage in times of need.
“According to the U.S. Black Chamber, the number one way that Black entrepreneurs start their businesses is by pulling money from a home equity loan,” Rose told the Defender. “It’s not through going to a bank and getting a line of credit. I’ve seen clients over the years be able to utilize their home to take care of a sick parent or send kids to college.”
While housing inventory is a critical factor for homebuyers and remains an issue across the country, the number of single-family homes listed for sale through the Houston Association of Realtors increased 37% since April 2024.
Home sales remain relatively stable in Houston despite volatility in the financial market seen in April, according to the Greater Houston Partnership. Home prices also grew marginally.
“Even when inflation does come down on a consistent basis, it doesn’t mean prices falling; it just means prices not rising as fast,” said Greg McBride, chief financial analyst at the personal finance website Bankrate. “For homebuyers, a more modest pace of appreciation, or even a period of stagnant home prices, can allow for incomes to grow further. Rather than stretching too much now, you may be able to buy a bit more comfortably in a couple of years if your income growth outpaces home price growth. But there are no guarantees.”
Turning a home into a wealth-generating tool
Once the keys are in your hand, the wealth-building begins. Experts say equity accumulates as property values rise and homeowners can tap into it through refinancing or home equity lines of credit (HELOCs).
“At 5-7% appreciation rates a year, with markets going up and down, you’re still going to appreciate every year,” Rose said. “I put that on top of a second year and then I have compounded on top of a third year, you literally have something that provides cash flow, as an investment or a place to live.”
As a broker and owner of George E. Johnson Properties LLC, Rose has been working in the Houston real estate industry since 2000 and has seen home prices go up from an average of $88,000 to $400,000.
Kathryn Jones-Hunter, a mortgage loan officer at U.S. Bank, echoed Rose’s observations that real estate can be a pathway for Black families to “move up.”
“We talk about closing the wealth gap between Black and brown communities,” Jones-Hunter said, adding that homeowners can also make improvements to a home to keep it modernized and increase its value over time. “The options are many. You can have the down payment to pay for your next home and rent that home [first home] out, or purchase another rental property. You can use it to reduce your overall debts.”
But homeownership has other benefits beyond the dollars. Stable housing can play a critical role in shaping a child’s future, improving their emotional well-being, academic success and overall development.
“It [homeownership] really stabilizes communities,” Rose agreed. “They [children] feel anchored. When they move every year from apartment to apartment, they don’t have that stability. It’s also a fact that homeowners are more likely to vote. A lot of the activism and community engagement come along with homeownership.”
Where to buy and what not to do
Neighborhoods labeled “low-to-moderate income” can offer strong returns, especially if they are centrally located or are around communities with grocery stores and highly rated schools.
“The property taxes are increasing more in those areas than they are in others,” Jones-Hunter said. “Being centrally located is always attractive because of the movement that takes place with major corporations and shorter commute times as people return to office.”
Advice for first-time buyers
For Black first-time homebuyers, experts agree on the following advice:
- Start saving early: Create a clear plan going forward and save up accordingly.
- Do not be afraid of seeking help: Work with a trusted real estate professional or housing counselor to understand the market, down payment assistance programs, loans, mortgages and associated costs.
- Ask questions: There is no shame in not knowing something. It’s your home and your money. You have every right to know what you are stepping into.
- Use the programs available: Experts warn that federal funds are sent back if they are underutilized. So, seek financial advice for one of the biggest decisions of your life.
- Think long-term: Whether you stay in a home for five years or 25, make sure you understand why you wanted to buy a home in the first place.
“You do not want a home payment that’s more than 40%,” Jones-Hunter stated. “Have the right expectations of what today’s market looks like, set an expectation that I can start smaller and move up and ask the questions so that you can be comfortable with the decision you are making. Know that there are programs out there to assist and work with people that’s willing to give you a plan to help you achieve your goal of home ownership.”
