High home prices and stubborn mortgage rates make the current housing market seemingly difficult to navigate—particularly for underserved populations.
Several grim numbers tell the story: The gap between Black and white homeownership is worse today than in 1968, when the Fair Housing Act was passed.
Lower-income families are 22% more likely to be denied a home loan, according to the Homeownership Council of America.
And only 3 in 10 veterans know they can qualify for a loan without a down payment.
“With high home prices and mortgage rates, the housing market is a challenging place for many buyers right now,” says Realtor.com® Chief Economist Danielle Hale.
“But it’s especially tough on groups that have historically faced disadvantages.”
First-time homebuyers might feel like they’re floundering more so than repeat buyers.
And although almost 80% of first-time homebuyers qualify for down payment assistance programs, only 13% take advantage of them.
Almost 80% of first-time homebuyers qualify for down payment assistance programs, but only 13% take advantage.
But there is help available for these homebuyers—namely, a buyer’s agent.
“A good buyer’s agent becomes a very strong resource that buyers may want to keep in their back pocket,” says Chantay Bridges, a senior agent at California’s eXp Realty.
“The homebuyer process can be tricky; assistance is the hammer you will need in your toolbox.”
The importance of buying a home
Nearly everyone has heard the conventional wisdom that buying a home builds wealth, and that it is also one of the largest financial decisions a person will make.
That’s all true.
This is yet another reason why members of communities that often have to fight their way to wealth equality and homeownership need an experienced real estate agent by their side.
“Buyer’s agents can help buyers understand the homebuying process and the resources available to make it easier to get a foot in the door,” says Hale.
It is important to note that buyer’s agents differ from listing agents.
Listing agents—the real estate agent representing the home listing—have a fiduciary duty to the home seller.
Buyer’s agents, on the other hand, are legally bound to help buyers.
Their sole responsibility is to help home shoppers overcome affordability challenges to land a great home.
Why the real estate market is tough right now
High mortgage rates, which have bounced between 6.5% to over 7% for months, are one of the toughest hurdles homebuyers face today.
Another huge roadblock is the national median cost of a home, which reached $442,500 in May.
The uptick in rates and home prices has put homeownership beyond the reach of many buyers.
In May, the required household income to purchase a median-priced home was a whopping $119,700, after accounting for the cost of tax and insurance, according to data from Realtor.com.
Indeed, the national median income needed to afford a home has risen nearly 50% since 2020, according to the National Fair Housing Alliance.
How can underserved homebuyers facing these affordability headwinds get ahead?
By turning to the many federal and local programs that aim to help—and this is where a buyer’s agent can guide people toward the right resources.
“A buyer’s agent is instrumental in helping by sharing information,” explains Bridges.
“Real estate and programs change constantly. One that is available today may not be there tomorrow. In addition, many have a short window and early deadlines to be considered. Assistance, support, teaching, and training clients is a must.”
Here’s how else buyer’s agents can help remove barriers to homeownership.
The challenges faced by Black homebuyers
A major issue for Black homebuyers is getting approved for financing, according to Urban.org.
During the COVID-19 pandemic homebuying boom, “compared with white and Asian borrowers, Black and Hispanic borrowers were significantly more likely to be denied home purchasing loans,” according to the organization.
This, combined with historical practices like redlining and ongoing biases in the housing market, contributes to the wealth gap and financial instability for Black homeowners.
This is where a buyer’s agent can make a huge difference, helping clients get their finances in order—from reviewing their credit reports to improving their credit scores—so that the loan process goes smoothly.
Agents can also help determine the amount the buyer has available for a down payment and set monthly budget guidelines (including the mortgage payment, taxes, insurance, and maintenance costs).
Agents can also help clients find a trusted lender.
Another vital piece of information buyer’s agents have is a deep knowledge of federal and state fair housing laws, which help ensure buyers won’t be denied the chance to buy a home or secure financing based on their race, religion, national origin, sex, disability, and/or family status.
Hurdles in the Hispanic homebuying process
Hispanics are the fastest-growing population of homebuyers, and 1 in 4 of these families completes the process entirely in Spanish, according to the National Association of Hispanic Real Estate Professionals®.
This means from the offer to the closing, Spanish-speaking homebuyers will need to understand and communicate sensitive financial information.
In this case, working with a buyer’s agent who speaks Spanish is crucial.
“I’ve had agents on my team provide guidance to Spanish-speaking clients in the past. The truth is that it can be dangerous for these good folks if they don’t connect with the right professionals,” says Cedric Stewart, a real estate expert at Keller Williams in Washington, DC.
“The client is placing their trust and financial future in the hands of this agent. As such, the agent must exercise extreme care and operate with the highest level of integrity.”
How veterans might be missing out
The U.S. Department of Veterans Affairs runs one of the best loan programs for buying a home.
It features some big financial benefits other loan programs can’t match, including no required down payment, no private mortgage insurance, forgiving loan requirements (such as a lower credit score), and a cap on closing costs.
Yet despite these massive upsides, only 3 in 10 veterans are aware that they can qualify for a home without a down payment, according to Veterans United.
Buyer’s agents can help veterans learn about down payment assistance programs they qualify for, as well as other benefits of VA loans.
“Teaming up with a knowledgeable agent can assist veterans in not only discovering the zero down payment requirement but other programs, funding, and assistance they may be eligible for,” says Bridges.
“While it varies from state to state, one thing that is in common, many may discover lower competitive interest rate options, grants, first-time buyer programs, in some cases property tax exemptions to boot.”
Adds Stewart: “A buyer’s agent must be an education-based consultant, willing to provide guidance, resources, and professional referrals to help their clients successfully achieve the dream of homeownership.”
