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Black Millennials fueled a surprising 2020 home-buying surge for African Americans
New York (CNN Business)Owning a home was never a priority for Kenyan immigrant Lynne Poole or her husband, Aaron prior to 2020. The newlyweds, like many Millennials, enjoyed the lifestyle that came with renting an apartment in a major city — in their case, Denver.
Lynne, 31, moved there in 2016 to earn her master’s degree in communications management before landing a marketing gig at Rental Kharma, a Denver-based company.
“We really liked the outdoors, eating out, nice restaurants close by,” Lynne told CNN Business.
But everything changed in March, when Denver Mayor Michael Hancock declared a state of emergency because of Covid-19 and ordered local venues to close. Suddenly, the Pooles’15th floor one-bedroom across the street from the governor’s mansion wasn’t so appealing.
“We weren’t looking forward to living far away because we were worried we wouldn’t be able to see our friends as much,” Lynne recalled. “Now with the pandemic, we couldn’t see them anyway because of social distancing.”
In September, Lynne and her husband, who is White and 35, bought a three-bedroom house in Commerce City, asuburb six miles outside Denver, making her one of many Black Millennials who became first-time homeowners this year.
She is part of a cohort of Black adults between the ages of 26 and 39 that sparked a nationwide rise in the overall home ownership rate for African Americans, which peaked in the spring, as millions of people were losing their jobs.
The increase followed a 3% rise in Black home ownership in 2019, census data shows, and came despite this year’s pandemic-fueled economic upheaval for many African Americans.
The National Association of Realtors and the National Association of Real Estate Brokers both say first-time Black Millennial buyers made the bulk of African Americans’ home purchases in 2020, as many fled apartments in major cities and purchased homes in suburbs.
“Without a doubt, African-American Millennials are participating in this home-buying surge,” National Association of Realtors economist Lawrence Yun told CNN Business. “The fact that Black home [purchases] are much higher now compared to before the pandemic is quite a surprise.”
Yun says the surge in Black Millennial home buyers is another example of the summer and fall’s K-shaped economic recovery. Many people who were doing relatively well before the pandemic and managed to keep their jobs are thriving. Some even deposited their federal stimulus payments into savings accounts.
Realtors and economists say they expect the Black Millennial home buying trend to continue in 2021.
“We’ve already seen indicators of more houses starting to come on the market, more people being aggressive,” said Baltimore realtor JoAnne Poole (who is no relation to Lynne Poole), broker manager at Berkshire Hathaway Home Services Homesale Realty.
Realtors say the pandemic, low mortgage rates and a new cultural emphasis on wealth building among African Americans are all factors driving “mortgage-ready” Black Millennials — those with credit scores and income levels that make them suitable mortgage applicants — to purchase houses in markets where owning a home is often cheaper than renting.
Poole says her firm’s business is up 12% year-over-year and estimates that sales to Black Millennials are about 2% higher than last year.
Metro-Atlanta realtor Ennis Antoine, 57, of Berkshire Hathaway Home Services Georgia Properties, says business in his market hasn’t been this hot since before the 2008 market crash. He estimates sales of homes are up 30% in the Atlanta area and says Black Millennials earning annual salaries of $80,000 and up are the majority of his customers.
“They’re saying, ‘Let me invest in myself, buy while I can,'” Antoine said.
Physical therapist Naomi Howe, 39, gave birth to her first child in March, three days before she and her husband, Cliff, 42, completed their purchase of a two-story home in Bowie, Maryland.
“The day we settled on our home was the week everything shut down because of Covid,” Naomi recalled. Her husband is a military veteran who works as a federal contractor. “I have friends and family who were laid off or had to take time off. Even though we are doing well, that’s not something that’s always guaranteed.”
Firefighter Tony Joseph, 33, of Buffalo, New York, bought his 2,000-square-foot house in May after saving up for the down payment for about a year. It was a dream come true for the engaged father of two, who wanted more space for his family.
“I didn’t like the direction the world was going, but I did have something to look forward to,” Joseph told CNN Business. “It made me feel good even though the world was a shambles.”
Economists and realtors caution that Black Millennials who bought homes in 2020 are not representative of the bulk of Black Americans, whose economic standing has worsened this year.
Urban Institute research associate Jung Hyun Choi says before this year, economists were most concerned whether Black Millennials could even buy homes given their disproportionate rates of student loan debt and other systemic inequities.
Now Choi says economists are worried about laid off Black homeowners who may soon face bank foreclosures. Most state and federal forbearance programs for homeowners who lost jobs in 2020 are set to expire by spring 2021, unless Congress passes a new stimulus package before then.
“If the labor market doesn’t recover and people fail to pay back bills before the [forbearance] period ends, it’s very likely home ownership in the Black community will drop significantly,” Choi said.