By Clare Bratten
NASHVILLE, TN – The National Association of Real Estate Brokers (NAREB) came to the Opryland Hotel as a part of the Full Gospel Baptist Church Fellowship International conference last week to explain all the ways people with modest but steady incomes can qualify for a mortgage for a home or investment property. Their message: owning real estate is how black families can build and pass on wealth.
NAREB is a professional organization formed in 1949 by black realtors and brokers. Free credit assessments were offered to attendees and representatives from SunTrust Bank, United Securities Fund, and Tennessee Housing Development Agency were speakers in two afternoons of education sessions. Sessions covered topics like the steps to home ownership, what constitutes credit worthiness, how to prepare to buy a home and the state of housing in Black America.
One session offered a quick overview of demographic trends, among black versus white home ownership.
“Homeownership is wealth building. The [national] rate of home ownership is 64.4 percent,” said Nadja Vital, Affordable Lending Regional Manager, for Freddie Mac. Vital said that in the state of Tennessee, the rate of home ownership among blacks is slightly higher than the national average of 46.3 percent. In Tennessee it’s 50 percent, but lags behind the average of 74 percent white.
Vital cited a NAREB report on the state of Black ownership in Tennessee which stated that home mortgage applications from Blacks rose by 22 percent between 2015-2016, while total population mortgage applications in Tennessee increased by 20 percent during that same time period.She focused particularly on millennials and offered some hope for that group. She pointed out that many of them (ages 25-34) are holding jobs and have a decent enough credit rating (674 or higher) that they could qualify for a mortgage, even if they have student loans.
“Millennials don’t think they can [afford a house] – they are waiting longer… When you ask a millennial why they say it’s because they have a student loan. That doesn’t mean you have bad credit. Sixty seven percent of millennials don’t even have any student loans and 14 percent of those who have student loans owe less than $10,000. The average student loan is $15,000. We keep hearing about the one guy who owes $100,000.”
However, most millennials don’t have the same type of credit as Gen-Xers and Baby Boomers. Vital said that Freddie Mac is willing to do enough research on a millennial’s credit record such as regular rent payments, utility payments that are not late, in order to underwrite the kinds of credit millennials might actually have. That would prompt banks to offer a mortgage to an individual who qualified.
Vital also punctured the myth that millennials don’t want to live anywhere but in an urban area and said 83 percent of millennials end up buying in the suburbs rather than urban core.
Rob Sergio Mack a real estate broker with ABL Realty Services said he hoped more black investors would join the market – particularly as areas like Bordeaux start to gentrify. “With a good positive influx of black investors, then that outcome will benefit even more people.”
Mack said he thought black investors would be more thoughtful about maintaining the character and culture of the neighborhoods they are investing in. “Especially the local investors – with the white investors – a lot of them aren’t local. We need more opportunity for local investors. I think right now is a good time to start pushing that agenda – let’s get this local pool of investors.”
“I would like to see [people investing in property for] rental, for first time home owners. I really don’t want to see a lot of flipping. I think that ship has sailed,” said Rob Mack.
His advice to people who would like to invest in real estate: “Don’t be scared. Knowledge is power. Contact a realtor. Know what your debt to income ratio is. And become a home owner because that’s how we pass wealth as a people. We all pass wealth from one generation to the next.”