The unaffordability of new homes has hit people of color particularly hard, and Bank of America is apparently doing something about it.
A 29-percentage-point gap in homeownership exists between Whites and Blacks, and for Hispanics, the gap is 21 percentage points, according to the National Association of Realtors.
“The competitive housing market has made it even more difficult for potential homebuyers, especially people of color, to buy homes,” BofA said in a statement.
To address that problem, it has announced a new zero down-payment, zero closing-cost mortgage for first-time homebuyers, which will be available in certain Black and/or Hispanic neighborhoods in Charlotte, N.C., Dallas, Detroit, Los Angeles and Miami.
Credit Criteria
The Community Affordable Loan Solution uses credit guidelines such as timely rent, utility bill, phone and auto insurance payments. It requires no mortgage insurance or minimum credit score.
Individual eligibility is based on income and home location. Prospective buyers must complete a homebuyer certification course prior to application.
“Homeownership strengthens our communities and can help individuals and families to build wealth over time,” said AJ Barkley, head of neighborhood and community lending for Bank of America.
“Our Community Affordable Loan Solution will help make the dream of sustained homeownership attainable for more Black and Hispanic families, and it is part of our broader commitment to the communities that we serve.”
In other housing news, Goldman Sachs economists predict that the nation’s housing slump will continue.
“Early this year, we argued that extremely limited available supply in the housing market would dampen the hit to housing activity from higher interest rates,” they wrote in a commentary.
“Since then, housing starts have declined 20% from their peak, and existing home sales have fallen 30%.”
Higher mortgage rates and reduced affordability are a big part of the problem, the economists note.
In addition, “existing home sales and building permits have fallen more sharply this year in regions where they increased the most in the earlier part of the pandemic,” they said.
WalletHub Market Rankings
Meanwhile, personal finance web site WalletHub ranked housing markets on 17 metrics, including home value forecasts, share of underweight mortgages, vacancy rates, housing affordability, credit scores and unemployment rates.
The top five cities are:
1. Frisco, Texas;
2. Allen, Texas;
3. McKinney, Texas:
4. Austin, Texas;
5. Nashville, Tenn.
Texas cities benefit from the booming economy in the state, which is benefiting from the energy industry’s surge and the lack of a state income tax.
The bottom five cities are:
296. Hartford;
297. St. Louis;
298. Shreveport, La.;
299. Bridgeport, Conn.;
300. Peoria, Ill.
