The housing market in St. Louis is less favorable for Black homebuyers than non-Black homebuyers, according to a new report by a St. Louis real estate agent group, which also acknowledged its past role in the homebuying disparity.
The St. Louis Realtors association published research last week that quantified the disproportionately unfavorable environment Black St. Louis residents faced when looking to purchase a home versus non-Black buyers. Findings include higher levels of mortgage denial, lower credit scores and income disparities. It’s the result of fallout from decades of systemically racist real estate practices pushed by the association itself, it said.
“Reimagining St. Louis” utilized data from the St. Louis-based Center for Civic Research and Innovation, a nonprofit research and analysis firm, and a study of 75,000 home purchases from the local multiple listing service between 2017 and 2022. It serves as an educational tool and framework for increasing the number of Black homeowners in the metropolitan area, said the association.
“Keeping the data at the forefront helps our real estate professionals to look at how their practices continue to dismantle some of those systemic barriers in place … My hope is, with the research and study being released ... that more people are aware that these things are still happening,” said Amanda Clair, director of diversity, equity and inclusion at St. Louis Realtors, who has a doctorate in education.
Findings and solutions in the report
The St. Louis Realtors report found that in recent home purchases, Black homebuyers tended to purchase cheaper, older, and smaller homes than non-Black homebuyers, and many Black buyers have lower incomes, credit scores, and are less likely to afford new loans.
To promote equity and homeownership, the group suggests, in its report to:
- Expand access to affordable mortgage credit, such as including Black communities in the Department of Housing and Urban Development’s Section 184 loan program. The program permits lower down payments, reduced insurance rates and flexible credit criteria for American Indian, Alaska Native families or tribes. It launched in 1992 to increase homeownership in Native American communities.
- Help increase the housing supply by partnering with municipalities, developers, and community organizations, which would result in streamlined construction processes, allowing for more housing to be built faster. With more housing units, in theory, prices would decline due to the law of supply and demand.
- Enhance credit counseling and financial literacy programs.
- Offer more access to down payment assistance programs for first-time buyers.
- Disperse grants or low-interest loans for home repairs in specific ZIP codes with lower-priced homes and homes that spend more days on the market.
- Provide greater enforcement of fair housing laws and increased education to residents and real estate professionals.
- Increase a variety of housing types, including duplexes, triplexes, and accessory dwelling units and office-to-residential conversions.
- Utilize on-time rent and utility payments in credit scoring models to reduce credit disparities.
The association plans to use the findings as a framework to support policies and advocate for the creation of new programs or the expansion of existing ones. To kick off the association’s initiatives, it will host the Reimagining St. Louis Expo, a financial education event, on Oct. 18. The free expo offers homebuyers sessions dedicated to credit building, budgeting, homebuying and wealth building, to name a few. The public can meet with exhibiting local housing organizations to learn about available homebuying education and tools.
“This is just a starting point for us … We’re really hoping our community partners and our legislators, everybody, takes the time to look at it, review it and then commit to it because it’s a situation where sometimes it’s as simple as education that can open the door,” said agent and past association president Tina Siebert in an interview.
Report is part of a larger move by organization
The report begins with a historical context on St. Louis real estate practices that placed Black residents in disproportionately challenging systems.
Such examples include zoning laws in 1917 that permitted racial segregation, followed by a 1923 referendum that permitted selling homes to Black residents in just three areas of the city and in the 1930s, the practice of redlining.
Redlining is a discriminatory practice that purposely kept Black Americans from making home purchases by denying mortgages for certain areas, which were often majority non-White, and it was a practice used throughout the country.
Higher barriers to homeownership are not exclusive to St. Louis.
A national study from mortgage marketplace LendingTree found 19% of mortgage applications are denied for Black applicants compared to 11.27% for other borrowers. And while 72.4% of white households own their homes, 44.7% of Black households do, according to data from the National Association of Realtors.
The report is part of a new focus for the group, now four years in the works, that started on the heels of the Black Lives Matter movement in 2020, which re-sparked nationally after the murder of George Floyd by Minneapolis police officer Derek Chauvin.
In 2022, following first discussions in 2021, the St. Louis Realtors published a public apology for its position in systemic racist practices since 1917, when the previous iteration of the local trade group first supported discriminatory policies.
“Our apology is not based on new revelations. It is based on the realization that we cannot move forward together as a community until there is an acknowledgment of our regrettable past,” wrote the association in the apology.