Home ownership in Northwest Arkansas disproportionately goes to white people, and experts say programs to help minority residents buy a home are disjointed, making it difficult to know where to turn.
Non-Hispanic white people accounted for 86% of the estimated 115,794 owner-occupied homes in Northwest Arkansas from 2013-2017, according to the U.S. Census Bureau. Hispanic residents made up the next largest at nearly 9%. Black people account for less than 1%. All other races make up the rest of the total.
By comparison, the non-Hispanic white population makes up 74% of the estimated 514,166 people in the region. Hispanics make up 16% and black residents comprise 2% of the total population.
Experts say a number of circumstances cause the lagging home ownership among the region's minorities including a lack of entry-level housing, no or poor credit, lack of knowledge about the process, language barriers and discrimination from lenders and sellers.
Black and Hispanic people in the United States make less money than non-Hispanic white people, according to the U.S. Census Bureau. Black residents' median household incomes in 2017 were about 59% of white residents' median household incomes, and Hispanic residents' incomes were about 74% of white residents' incomes.
Buying and selling
Sometimes buying a home is all about who you know.
Flor Berganza, a Hispanic resident living in her second home in Bethel Heights, is ready to buy and move into a third, also in the Benton County city. She wants to do some renovation before she moves in. Berganza works as a custodian at Hellstern Middle School in Springdale, but said she likes the neighborhoods and the quiet in Bethel Heights.
Berganza has known Realtor Marcy Chavez for several years. Chavez helped Berganza with financing and credit. She also helped Berganza sell her first home, and in the process, Berganza learned a lot, Berganza said.
Berganza said she knows not everyone will have her positive experience.
"I'm glad for it," she said.
Charlotte Henderson, a software quality manager living in Bentonville, decided to sell her house after owning it for about 10 months. Living in Northwest Arkansas hasn't been an entirely positive experience, she said.
A black resident from Atlanta, Henderson said she hasn't felt quite at home. A racially charged atmosphere has become more prevalent across the country, and this region is no exception, she said.
Henderson said she encountered difficulty during the loan process to buy her home. For instance, the bank changed loan officers multiple times on her, and Henderson had to re-verify her information every time, she said. She started to suspect a bad customer service experience went beyond the routine inconveniences a white person might go through.
"Being in Northwest Arkansas and being black, I've kind of gotten used to being ignored," she said. "It's kind of sad."
Henderson said she plans to move back to Atlanta once she sells her home.
Home ownership may not be the goal of a particular demographic. The Marshallese, for instance, are accustomed to a simple island life that doesn't involve mortgages or loan officers or credit scores, said Melisa Laelan, director of the Arkansas Coalition of Marshallese.
Laelan estimated about 15,000 Marshallese people live in Northwest Arkansas, mostly in Springdale. The Marshallese are free to work and travel in the United States without visas under a treaty between the two nations.
The majority of Marshallese in Northwest Arkansas work in food production and live in rental properties, Laelan said. Marshallese families tend to stay together, with few seeking separate homes of their own, she said.
"Buying a house requires having good credit," Laelan said. "Many of us really just aren't used to the credit system, the consumer side of things. We're just not used to that."
Barriers
Many of the barriers Hispanic residents face nationally apply regionally as well, said Luis Martinez, president of the Northwest Arkansas chapter of the National Association of Hispanic Real Estate Professionals. The national organization trains real estate professionals on how to best educate prospective Hispanic homeowners and connect them with resources.
Some barriers, such as a lack of entry-level housing options, affect everyone regardless or race or ethnicity, Martinez said. The average price of a home in Washington County last year was $235,618, according to the Arvest Bank-sponsored Skyline report. Average home price in Benton County was $238,908.
Median family income for the Northwest Arkansas metropolitan area is $69,900 a year, according to the U.S. Department of Housing and Urban Development. Families who spend more than 30% of their income on housing are considered cost-burdened and may have difficulty affording necessities such as food, clothing, transportation and medical care, according to the department.
Minorities who have no or bad credit get hit especially hard, Martinez said.
Hispanic home ownership nationally has steadily risen since 2015, from 45.6% to 47.1% percent last year, per the Census Bureau. Many Hispanic residents want to buy homes, they just don't know how to get there, Martinez said. Education is key.
The association does what it can to present educational opportunities by hosting workshops and getting everyone involved in the home buying process in the same room together. But each potential buyer is unique, and real estate professionals often have a variety of clients, he said.
"A lot of people base their information from what they hear from other people. Sometimes they don't go right away to a professional who knows that information," Martinez said. "I tell my clients I don't know everything, but if I don't know, I will ask someone that question."
Aside from the language barrier, Hispanic residents face other challenges unique to them, Martinez said. For example, those enrolled in the Deferred Action for Childhood Arrivals program up until recently could qualify for Federal Housing Administration or conventional loans. Within the last few months, the FHA loans for Deferred Action recipients have stopped, according to HousingWire, a news source for national mortgage and housing markets.
Hispanic residents may also apply for a loan through their taxpayer identification number. But, often, they're asked to pay a higher down payment or face a higher interest rate on the loan, Martinez said.
Education
Credit Counseling of Arkansas offers a free class on home buying for all residents, in addition to regular financial consulting service. More than anything else, a disproportionate number of minority residents come to the table with bad to no credit, said Joe Doelger, director of community relations and housing counseling.
The home buying class gives clients a big-picture view of the process, who to talk to and what to expect. Key decisions, such as selecting a fixed or adjustable rate mortgage, are laid out.
The idea is to get participants familiar enough with the process to ask their own questions when it comes time to buy a home, Doelger said.
Too often, minorities are the targets of scammers, he said.
Minority communities typically are more vulnerable because they may not be familiar with their rights and think they should take the first option presented to them, Doelger said. Also, paperwork is in English, which may not be an immigrant's first language. The documents can be daunting to English speakers as well because of how complicated they can get, he said.
"The scoundrels in the business don't exactly walk around with a big hat that says 'scoundrel' across the top," he said.
Education can be a helpful tool, said D'Andre Jones, board member of the Northwest Arkansas chapter of the National Urban League. Some black residents don't know about the process to buy a home because they grew up in rental properties and never considered the idea, he said.
"If you've lived in housing projects your entire life, if you were growing up in rental properties, growing up poor, then it's really challenging to really understand about home ownership," Jones said. "It goes back to credit, higher interest rates and other barriers that preclude us from home ownership."
The Urban League offers workshops on home ownership and building equity, Jones said. Home ownership education also is part of the national group's mission, he said.
Fighting bias
Black residents often grow up with the notion they're second-class citizens, Jones said. Because of that, some may seek public housing or a Section 8 voucher before seeking a traditional home loan, even if they'd qualify for the latter, Jones said.
It's also more difficult for black residents to know if they're being taken advantage of, he said. For instance, a black family asking for a loan may be treated differently than a white family would, and may not know it, Jones said.
"It goes back to racism. For different groups, it looks differently. But, at the end of the day, that's the perpetrator," he said. "If we're able to understand it, then we'll be better able to see it and handle it."
Steven Plaisance, president and chief executive officer of Arvest Bank's Mortgage Division, said Arvest makes an effort to hire people who are representative of communities they serve.
"We have a strong commitment to educate our lenders on products available whether through Arvest, local, state or federal agencies," he said. "We also have many associates involved in civic and nonprofit organizations to continue to understand the needs of our customers and keep us up to date on programs available."
All associates at Arvest are required to take diversity and inclusion training from the bank's diversity and inclusion officer and talent management team, Plaisance said. The expectation is that everyone is to be treated fairly, and as valued and respected, with zero tolerance for discrimination or noninclusive behaviors, he said.
Racial bias is a barrier across the nation when it comes to home ownership, and Northwest Arkansas is not immune, said Carol Johnson, executive director of the Arkansas Fair Housing Commission. The commission deals with reported cases of discrimination based on race, color, national origin, religion, sex, disability or familial status, according to its website.
The commission sees a few fair lending cases a year, but Johnson suspects there are cases out there the commission doesn't see. Minority residents being treated unfairly wouldn't know about the loan options they don't receive, or if they're reading terms and conditions different from what a white family might see, Johnson said.
"Discrimination is a serious barrier, and we see our share," she said. "We're not alone in that. Other states and other parts of the country, everybody sees some of that stuff."
Barriers to minority homeownership
Barriers to homeownership faced by racial and ethnic minorities differ depending on where they may live. Some barriers include:
1. Lack of capital for down payment and closing costs: Down payment and closing costs are often the single greatest barrier to homeownership. Minority families lack the accumulated wealth for down payment and closing costs. Homeownership is a vehicle to building wealth and assets, which in turn become instruments for homeownership opportunities for the next generation of family members.
2. Lack of access to credit and poor credit history: Access to lenders becomes difficult when mainstream financial institutions are not located near potential low-income homebuyers. Many potential low-income homebuyers have not established credit or maintained a good credit history. Families with poor credit histories are either rejected for mortgage credit or given loans with high interest rates.
3. Lack of understanding and information about the homebuying process: Homebuyers who do not understand the homebuying process, or for whom English is a second language, are less likely to be successful in their search for a home of their own. These families are particularly subject to predatory lending practices by those who charge exorbitant fees and make loans with a high likelihood of foreclosure.
4. Regulatory burdens: The high cost of housing can be the result of government regulations. Federal, state and local codes, processes and controls can delay and drive up the cost of new construction and rehabilitation.
5. Continued housing discrimination: Americans can be denied access to a suitable living environment based on race, color, national origin, religion, gender, familial status or disability.
Source: Department of Housing and Urban Development
Reasons for denial
The three most frequently cited reasons various racial and ethnic groups across the country were denied a home mortgage in 2015.
White:
Debt to income ration^25%
Credit history^21%
Collateral^18%
Black:
Credit history^31%
Debt to income ration^25%
Collateral^13%
Hispanic:
Debt-to-income ration^26%
Credit history^21%
Collateral^15%
Asian:
Debt to income ration^29%
Collateral^15%
Credit application incomplete^12%
Source: Pew Resarch Center
NW News on 07/28/2019