By Celene Talavera and Will Smith-Moore | Special to The OBSERVER

Keisha Mathews
Homeownership affordability in Sacramento has been very difficult for African Americans, says real estate agent Keisha Mathews, citing how many of her clients have not been able to qualify for area asking prices. Louis Bryant III, OBSERVER

Part of the American dream is owning a home, or at the very least enjoying a reasonable living situation. The dream of affordability is escaping Sacramento’s Black residents.

Homeownership rates have largely been on a decline for the past 15 years, while rental prices have increased.

According to the most recent U.S. Census estimates, about 34% of Black residents in the Sacramento region owned their homes in 2021, compared to 62% of the residents in the region. In 2006, Black homeownership rate was at 45% while the rate for residents in the region was 64%. 

While the homeownership for Black residents decreases, the rate of Black residents renting in the Sacramento area has increased. Black renters’ rate in the U.S. is at 56%, while the renters’ rate for Black residents in the Sacramento area is at 66%. 

The reasons for the decline in homeownership include rent prices, home affordability, and the lingering effects of economic downturns. The pandemic became an additional factor by affecting home prices and mortgage rates, creating financial difficulty for Black residents to reach homeownership.

The average rent in Sacramento was $1,390 in 2019, according to the U.S. Census Bureau. After the COVID-19 pandemic, the average rose to $1,556. Creating a 12% increase over the two-year span, in comparison the national average rose 8% in the same time span.

Sacramento State student Isis Zarate-McCoy, 21, lives with her parents. She cited rising rent as the reason it took her parents longer to transition from renting to owning a home.

“Rising rent was definitely a setback,” she said. “I would say home prices are so high for what you’re getting. My family moved from the Bay in 2001 and prices are getting just as high here.”

Zarate-McCoy showed gratitude towards her parents, who allow her to stay with them for not much money. She has tried to find her own place because she wants her own space. But she can’t afford to rent, let alone own.

“As someone who is a full-time student and has a part-time job,” she said, “it feels almost impossible at this point in time.”

Data from Apartment List further demonstrates the drastic change in rent for Sacramento – rent growth since March 2020 of 20%. Growth rates for San Francisco, Oakland and Los Angeles are minus-10%, minus-12% and 8%.

Fellow Sac State student Michaela Graves, 24, expressed frustration when asked about finding a place of her own.

“Trust me, I tried,” Graves said, “but the rent is too damn high!”

Homeownership Affordability

While rent prices have increased, owning a home has not become any easier for Sacramento’s Black residents. Real estate agent Keisha “Kee” Mathews said the 2008 housing crisis significantly impacted Black residents’ buying ability.

“I know people who right before COVID were still dealing with the aftermath of the effects of that downturn in the market, where they lost their homes to foreclosure or had to short sell,” Mathews said.

According to the National Low Income Housing Coalition, African Americans lost half their wealth in the beginning of the recession due to the housing crisis and unemployment.

“The disparity ratio shows that African Americans are more than 70% more likely to have been foreclosed upon than non-Hispanic Whites,” the report said.

The pandemic did not make homes more affordable for Black residents in the area. During and after the pandemic lockdown, home prices for the Sacramento area have been high.

According to Redfin, the median sale price for Sacramento homes in September was $468,000, which was a 1.7% increase from last year. At the start of the pandemic, homes were about $340,000.

“I saw a lot of my African American buyers go from being able to qualify for a $400,000 to $500,000 home to a $200,000-$300,000 home,” Mathews said. “$200,000 to $300,000 doesn’t buy much in the area, especially if you are competing against other buyers in such a small pool.”

She added that the high asking price for homes discouraged buyers from putting in offers, especially with heavy competition and only a small pool of homes available.

Rising mortgage rates also are a growing concern. According to Freddie Mac, a 30-year mortgage rate is around 7%. At the start of 2020, a 30-year mortgage rate was 3.72% and a 15-year mortgage rate 3.16%.

Kathi Sinkfield-Willis, a homeowner of 21 years in the Natomas area, said that although she is paying off her home, she is bombarded with offers to refinance or sell.

“We’re being pressured all the time – we’re getting emails, pamphlets on our door, people coming to our door, we’re getting phone calls, it’s constant,” Sinkfield-Willis said. “So I try to eliminate myself from these lists.”

Sinkfield-Willis said the area she lives in has become desirable. According to Redfin, the Natomas Park median home sale price is around $620,000.

Although she has refinanced before and is in a comfortable financial position to pay off her home, Sinkfield-Willis said she knows that were she to sell her home, she couldn’t buy another in Sacramento because of high prices and high mortgage rates.

Mathews said the two most common factors keeping Black residents from homeownership are credit and down payment. Applying and getting approved for mortgage loans can be a problem for minority populations. Black applicants have a higher chance of getting rejected compared to White applicants.

According to an analysis by the Pew Research Center, 27.4% of Black applicants were denied mortgages in 2015. The findings revealed that Black applicants often are denied because of credit history.

In a report by the Urban Institute, Black households have difficulty accessing credit. That keeps them renting and higher rent prices make it difficult to move to homeownership.

The second factor affecting Black residents is the issue of financing for a down payment. According to the Urban Institute’s report, potential homebuyers said the lack of down payment is the critical barrier that kept them from homeownership. Potential buyers cannot finance a down payment because of low income or capital.

Fixing The Housing Issue

Sacramento’s homeownership gap is expanding, but there have been attempts by legislation and programs to help address the issue. SB 330, also known as the Housing Crisis Act of 2019, was passed as an attempt to address home development.

The bill was designed to help speed development of homes by processing permits in a timely manner. The bill would limit local government agencies from downsizing the land intended for housing development.

In a press statement, Sen. Nancy Skinner, who introduced the bill said “SB 330 green-lights affordable and market-rate housing that already meets local zoning rules and prevents cities from enacting new regulations that might limit the housing we so desperately need.”

The California Housing Finance Agency (CalHFA) is trying to address the problem by creating the Building Black Wealth Initiative.

“It’s really an education initiative, to let people know a little bit of the scope and breadth of the discrimination that the housing industry has shown against the black community in the past, you name it number of years,” said CalFHA spokesperson Eric Johnson.

Johnson said that while CalFHA provides the history about Black homeownership and the information on the buying process, it also has partnerships with organizations such as Sac Cultural Hub and Greater Sacramento Urban League that connect Black individuals with resources needed to buy homes.

Johnson said CalFHA is working on a program called California Dream for All. The program will help low- to moderate-income, first-time buyers purchase homes by assisting with down payments and closing costs.

Johnson and Mathews both agreed that potential Black homebuyers need to work with the realtors and loan officers who can provide the best guidance for buying a home. To help increase homeownership rates, Mathews also suggested Black homebuyers try to put in offers for homes even if the asking prices are high.

“If I have anything to do with it, which I plan to, the rates for the Sacramento region of Black homeownership will increase,” Mathews said.

EDITOR’S NOTE: This story was produced by Sacramento State students led by Phillip Reese, assistant professor of journalism.