Minority home ownership rate declines againby Dan Olson, Minnesota Public Radio
St. Paul, Minn. — Minnesota's minority home ownership rate has declined again. New Census numbers show the drop off is a prolonged trend of four years.
High minority unemployment rates are part of the cause, Minnesota housing officials say. The other side, state officials say, is the potential for home ownership rebounding because of record low home prices and lending rates.
Minnesota has among the highest home ownership rates in the country, with nearly 75 percent of the state's households owning their homes.
Comparitively, minority households reached peak ownership in 2003 wtih just over 47 percent.
Officials regarded the increase as a hopeful sign that minorities were gaining a foothold as property owners, an indicator of increasing wealth.
The 2008 crash changed the picture.
New Census numbers show the state's home ownership rate for minorities is falling, said Minnesota Housing Finance Agency commissioner Mary Tingerthall.
Home ownership rates dropped from 46.5 percent to 43.3 percent and that trend continued downward in 2010 to 41 percent," she said.
Unemployment is part of the reason for declining minority home ownership rates in Minnesota. Unemployment in the general population is around 7 percent, but reaches 20 percent and higher for minorities, Tingerthall said.
"That, combined with tougher mortgage qualification standards, I think, has really landed a double whammy for communities of color."
Since 2007 and including this year, there have been more than 100,000 home foreclosures, according to the Minnesota Home Ownership Center — another illustratration of the impact the Great Recession has had on homeowners.
Median Minnesota home values have plummeted on average by nearly a third.
However one homeowner's pain is a potential home buyer's gain, and there are many single family housing bargains at a time when interest rates are at record lows.
The crash cast home ownership in a new light for many Minnesotans What seemed like a great investment as home values spiraled ever higher landed with a thud.
After the crash, somewhere between 15 to 46 percent of Minnesota homeowners are estimated to have mortgages that exceed the value of their home.
Some would conclulde that home ownership is not a good deal and it is better to rent.
It's true that an average monthly mortgage payment costs more than rent. However, Tingerthall said, the rental vacancy rate in parts of Minnesota is very low, and that puts upward pressure on rents.
Tingerthall worries that will put renters in a nasty spot.
"Owners of rental properties will begin to see the opportunity for the first time in several years to raise their rents, so we're concerned that people will really get caught in the squeeze not being able to qualify for a mortgage, at the same time seeing their rents going up."
Warning signs are already appearing. A growing number of Minnesota renters are paying up to half their income and more for housing, state officials say.
The Minnesota Housing Finance Agency has a program that this year will help slightly more than 2,000 first time home buyers. It helps pay their down payment and closing costs and requires that they take housing classes to learn how to care for their property.
- Morning Edition, 09/23/2011, 7:20 a.m.