MINNEAPOLIS — There's no denying that the real estate market has drastically changed.
It happened even recently when mortgage rates reached more than 5% this spring, the first time in over a decade.
That's making homeownership even harder, especially for communities of color hit by generations of discriminatory policies.
"Minnesota has one of the worst home ownership gaps between Black and white households, as well as Indigenous and Latinx communities," said St. Louis Park Housing Supervisor Marney Olson. "And while we've known about this for a long time, not a lot has been done about it."
She helped the city launch a new program late last year to help first-generation homebuyers in particular.
"Not only do we want to get people who have historically been kept out of home ownership into home ownership, but we also want to help them create generational wealth because home ownership is one of the best tools for creating wealth," said Olson.
According to the National Association of Real Estate Brokers (NAREB), a group created more than 70 years ago by African American real estate professionals who were excluded from the National Association of Realtors, a recent study found only 42.1% of Black households owned their own homes in 2019. That's compared to to 73.4% of white households, making the gap in Minnesota among the worst in the country.
Olson's program is making it a priority to close that.
"You don't pay a monthly payment, there's no interest accruing, but 5% of that loan is forgiven each year, so if you do stay in the home for 20 years, the entire loan is forgiven," explained Olson. "But if you sell after five years or 10 years, a portion of the loan is forgiven, again, helping to create that generational wealth."
There are other first-time homebuyer programs across the state that help with down payment assistance in particular; from the Minnesota Housing Finance Agency to non-profits like Project for Pride in Living and Build Wealth Minnesota that's working to finance 9,000 new homeowners of color.
"There's so much money out here and there's so much more money that's on the way," said longtime realtor Denise Mazone, who's also the president of the Minneapolis Area Association of Realtors.
Mazone says it's up to realtors to know what's available and for mortgage companies to more willingly accept assistance dollars and had this advice for people looking to buy a house.
"Ask the question, do you know how to get down payment assistant dollars and if they say no, then you might want to consider interviewing more realtors," said Mazone.
She's also a member of NAREB and leads first-time homebuyer classes once a month for free, hopeful that education can also help lessen the inequities — something, she says, has only gotten worse, especially among Black homeowners.
"Back in the 50s, they owned more houses than they do now," said Mazone. "If we can bridge that gap one house at a time, that's what we're working on."
Mazone said sometimes first-time homebuyer programs can be problematic and people should be wary of many factors, including taxes, the home's price and the fact that their buying power is going down.
She says what matters is realtors and other organizations are searching to find someone a home that's truly affordable.
"We have to be very intentional and very diligent about using the things that we have available to us and getting folks connected with them," said Mazone. "If we can’t make that connection, they’re going to take those dollars and move them somewhere else."
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