Why Bay Area Black, Latino Residents Struggle Most to Become Homeowners

Montana Hooks fondly remembers a childhood filled with open houses on the weekends.

But the Fremont native wasn’t peering into bedrooms, living rooms and kitchens with her house-hunting family. She often found herself dashing across streets to set up signs to attract prospective buyers for her realtor father.

On weekday nights, he taught her to run comps, the process of using home sales data to come up with a house price. Those lessons stayed with Hooks, but she didn’t plan on following in her father’s footsteps.

But Hooks, 34, has spent the last few years immersing herself in real estate after leaving a career in corporate marketing.

“Real estate wasn’t something I thought I would do as an adult,” said Hooks, a realtor with eXp Realty. “I always knew, and looking back to my time with my dad, that real estate is definitely a way to create huge transformative wealth in your family if you stick with it.”

Selling homes is about much more than properties changing owners, Hooks said. A home gives buyers stability and the feeling of being rooted in a community.

Hooks, who is Black, focuses on working with first-time buyers and people of color, mostly Black or Latinx — the type of buyers who struggle the most to purchase homes in the Bay Area.

When she’s not working directly with clients, she writes articles to help buyers understand the home-buying process. A couple of years ago, she launched bayareablackrealtors.com, a website that matches Black buyers with agents.

In 2020, nationwide, just 6% of realtors and real estate agents identified as Black while 11% identified as Hispanic.

“I can’t even tell you how infrequently I see another Black listing agent,” Hooks said. “And I can’t tell you how many times I’ve been looked at with a side-eye when I show up to sell a home, even in Oakland.”

She continued: “The more people of color that work in real estate on any of these sides of the transactions, the less inequity that buyers of color will feel when they’re going through the buying process or when they’re trying to sell their home.”

While Hooks is dedicated to selling homes to people of color, she has yet to buy one for herself.

“I don’t know if I will ever be able to afford Oakland,” she said. “It’s like the hairdresser whose hair is always messy or the chef who eats macaroni and cheese at home.”

Homeownership is the most common pathway to build wealth in the U.S., but the cost of owning a home is increasingly out of reach for first-time buyers. In August, the average 30-year mortgage rate reached the highest level — 7.23% — in more than two decades, according to mortgage buyer Freddie Mac. High interest rates and low inventory have combined to create a daunting atmosphere for people looking for their starter home.

Hooks’ experience underscores a paradox many would-be Latinx and Black buyers face: Not coming from generational wealth makes it harder to accumulate wealth. From 2011 to 2021, Black homeownership in the Bay Area ranged between 29% and 33%, according to U.S. Census data. For Latinos, the rate ranged between 35% and 39%. At around 60%, both white and Asian households, have the highest homeownership rates in the Bay Area.

Both Latino and Black households in the Bay Area own homes at lower rates than they do statewide or across the country. More often than not, clients come to Hooks excited to shop for a house only to find that they don’t qualify for a mortgage, can’t afford the location they want or simply can’t find any houses in their price ranges.

The Black and Latinx rates are low, but it’s not because they don’t want to own homes, according to Rebecca Gallardo, a Latina realtor in San José for more than 30 years.

“At the end of the day, homeownership for Latinos and African Americans creates not just general generational wealth, but also contributes to the socialization of your family and creates sustainability,” said Gallardo, a former board member for the National Association of Hispanic Real Estate Professionals.

In California, more than half of all households — 54.4% — own homes, but Blacks and Latinos are the only demographic groups that have homeowner rates under 50% at 34.5% and 43.2%, respectively. The trend is related to the unaffordable market, according to Jung Hyun Choi, a senior research associate with the Housing Finance Policy Center at the Urban Institute, a think tank focused on economic and social equity.

“In places like California, where homes are really unaffordable, it is really difficult for those with fewer financial resources to access homeownership,” she said. “Homeownership itself is creating greater wealth disparities and inequalities among those who have been able to access homeownership and those who have not, and that is likely to exacerbate over time.”

Many Black and Latino households also lack know-how about the buying process, according to Maria Michel-Ramirez, a Latina East Bay realtor. And even after educating potential buyers, realtors often contend with another barrier: fear. Michel-Ramirez, who owns a home in Pinole and several investment properties, said she can’t even convince her own mother to give up renting.

“I find that a lot of Latinos and African Americans tell me, ‘Well, if I buy a house, I’m responsible for everything. Right now, if my dishwasher breaks, I just call the landlord, or the property manager,’” she said. “They see the negative part of homeownership, not the positive part. They don’t think, like, ‘Oh, if I buy a home, I’m going to build equity. And, I can write off my property taxes and I can write off my insurance.’”

Michel-Ramirez recalls a couple that was paying $3,200 a month in rent. She found them a home to purchase in a better neighborhood for a total monthly payment of $3,400, including the mortgage, taxes and insurance. According to Michel-Ramirez, the couple initially balked at the higher monthly cost of $200.

“A lot of individuals just don’t have the education that comes with homeownership. They think it’s like a lot of money out and no money in,” she said. “A lot of Latino and African Americans come from parents who don’t own a house and have to be the first ones to make the move and that’s a little scary.”

Many Black and Latinx households just don’t have the income needed to keep up with the Bay Area’s rising home prices. In California, the median income for white households is 45% higher than Latino households and 65% higher than Black households, according to the Public Policy Institute of California.

Michel-Ramirez once represented a family of buyers — two parents, two grown children, a niece and nephew — who combined their incomes to qualify for a mortgage for a house in Richmond.

“With the incomes that many individuals have here, they have to come together and do this,” she said.

The median price of an existing home in the Bay Area is $1.3 million, according to the California Association of Realtors. Gallardo, the San José realtor, said the market doesn’t have inventory, especially at the low end.

The lack of inventory, she continued, “doesn’t affect just the first-time homebuyer, the Latino and African American community, but it affects our country as a whole because there’s just not enough inventory and not enough housing stock for every stretch of the imagination — from the homeless to the first-time home buyer to the moderate buyer.”

Issi Romem, a housing and real estate economist with MetroSight, an economics research company, said people who own homes tend to be more stable and engaged in their communities, but he added that renting is not inherently bad since it gives people more flexibility about where they want to live and for how long.

“What’s not OK is when people are forced into renting because they can’t afford to buy a home,” Romem, who also conducts research for the Terner Center for Housing Innovation at UC Berkeley, told KQED. “We want people to have both options. We don’t want their finances or, more correctly, the cost of housing as it relates to their finances, to prevent them from having access to all the good that can come with homeownership.”

Boosting the state’s housing inventory, especially at low price points, would make a huge difference. California gives every city housing goals at different levels of affordability, but cities rarely meet those goals, especially at the lower end of the market.

“The most important fundamental fix is building more housing,” Romem said. “That’s what matters — housing of all types, not housing geared at this population or that population. Build enough new housing, and it will keep price growth at bay.”

Hooks, who has deep knowledge and roots in real estate, still faces barriers to home ownership. Her father was a realtor, but her family didn’t own a home when she was growing up.

“I went to six different elementary schools and moved around a lot, so I understand the stability that homeownership can provide, and even tax benefits and just having something there to pass on,” she said. “But for me, it seems very difficult to do.”

Television shows such as Selling Sunset on Netflix might make it seem like realtors are raking in millions in sales commissions, Hooks said. But as a single woman in her mid-30s, she said she doesn’t have enough income to buy a home on her own.

“I totally understand how difficult it is to scrounge up the funds for the down payment,” she said. “I have a lot of empathy for my buyers.”

Hooks is contemplating buying an investment property — out of state. For now, she prioritizes living in Oakland.

“The cost of living might be a bit more affordable elsewhere, [but] you’re going to be giving up some of that culture that you love or the nightlife or access to great restaurants and great food or proximity to nature,” she said. “So, there’s a lot to think about. And for me, I’m not sure I’m ready to make that trade yet.”