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54 | M REPORT O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST DATA Annual Foreign Investment in American Home Sales Falls What factors are to blame for the change? T he National Associa- tion of Realtors (NAR) recently released results from a survey, which showed America experienced a 5% decrease in annual foreign invest- ment in home sales. According to survey data, foreign buyers invested $74 billion in the direct purchase of existing homes dur- ing the year spanning April 2019 through March 2020. This rep- resents a 5% fall from one year ago and also marks the second year in a row that there was a decline in for- eign investment in United States residential real estate. NAR Chief Economist Lawrence Yun commented on the decline, citing pos- sible factors attributing to it: "Foreign buyers and recent immigrants have become less of a force in the United States housing market over the last couple of years. A lack of housing inventory— the primary factor hindering domestic buyers—is also holding back some foreign buyers. Additionally, less cross- border travel, falling international trade and fewer foreign students attending American universities are impacting foreign homebuyers." Other statistics highlighted in NAR's report included the fact that China and Canada ranked among the top two spenders in America's residential sales dollar volume, posting $11.5 billion and $9.5 billion, respectively. This duo has managed to maintain these top positions since 2013. Fast on China and Canada's heels were Mexico ($5.8 billion), India ($5.4 billion), and Colombia ($1.3 billion). Among these top five spenders, China was the only one that spent less than the year prior (down from $13.4 billion last year to $11.5 billion this year). The major "upset" within this group was Columbia, which ousted the United Kingdom from its previous fifth place roost. Yun also shared his predictions for what to expect in the coming days: "In the upcoming year, better opportunities may become available for foreign buyers in large cities like New York and San Francisco. New patterns of domestic migration are trending away from expensive cit- ies to more affordable suburbs and small communities because of the pandemic and greater work-from- home possibilities." Leveling the Playing Field for Black Homebuyers Black homeownership rates are improving, but there is still work to be done. D espite a recent climb in homeownership by Black Americans, new data shows that Black mortgage applicants are denied at a rate 80% higher than their white peers. Starting in the 1930s, a practice called "redlining" widely denied mortgages in neighborhoods deemed "hazardous," which were predominantly non-white. Though outlawed in 1968 as part of the Fair Housing Act, homes in formerly redlined areas continue to have lower values, and this analysis shows continued mortgage inequity. The scars of redlining are still visible in the housing market to- day, researchers at Zillow reported. "At a time when racism is at the front of many Americans' minds, the disparity in mortgage rate denials is yet another reminder that the housing market—and country—have not done enough to address inequities and heal the scars from an unjust past," Zillow Economist Joshua Clark said. "The mortgage approval process is rooted in a racially unjust history that persists to make homeowner- ship a far more difficult dream to achieve for many Black Americans. Owning a home is a major way to generate, keep, and pass down wealth, and unequal access to mortgages only serves to further entrench inequality." Based on demographic data from the 2017 US Census Bureau's American Community Survey to determine the racial population makeup for ZIP codes, the analysis found that all applicants living in predominately Black neighbor- hoods are more likely to be denied a loan. That rate increases for people of color. Although there has been progress in increasing the Black homeown- ership rate, a Zillow analysis of the most-recent Home Mortgage Disclosure data suggests work remains to fully address the dispari- ties the Black population faces. Compared to 46% of white buyers, 59% of Black homebuyers reported that they are concerned about qualifying for a mortgage in the first place, according to Zillow survey data. And while mortgage denial rates overall have fallen over the past decade, inconsistencies remain along racial lines. While the Black homeowner- ship rate has increased to 44%—its highest level since 2012— it still lags far behind the overall homeowner- ship rate of 65.3%. Values of homes owned by Black people are also significantly behind, typically worth 17.6% less than the overall American home value of $218,2034. According to the latest Zillow Housing Aspirations Report (ZHAR), 63% of Black respondents and 58% of white respondents say owning a home is necessary to live "The American Dream." One step toward solving this problem is reforming credit scoring systems (including allowing rent payments to be positively reflected in credit scores), which would expand access to capital for under- served communities of color. Other possibilities include expanding funding for the U.S. Department of Housing and Urban Development (HUD) Fair Housing education and enforcement efforts or further legislation like that proposed in New York, designed to take aim at lingering inequalities within the housing market as a whole. "Foreign buyers and recent immigrants have become less of a force in the United States housing market over the last couple of years." —Lawrence Yun, Chief Economist, NAR