Minority Home Ownership Hits Record

April 20, 2004 - After renting apartments all her adult life, single mom Maria Gonzales, 37, took advantage of low mortgage rates last year and became a first-time homeowner.

"I got tired of paying for a two-bedroom apartment," says the owner of a three-bedroom townhouse in Washington, D.C.

Largely thanks to those low interest rates, the percentage of Americans who owned homes increased to its highest on record in 2001 — and the homeownership rate for minorities rose faster than the rate for whites for the second year in a row. Nearly 68% of Americans owned a home last year, up half a percentage point from 2000.

Almost half of minorities, a record 48.6%, owned a home in 2001, up 0.8 percentage points from 2000, according to newly released government data. That's still far below the white homeownership rate of almost 75%.

"To see these numbers continue to increase in a softening economy is very encouraging," Housing and Urban Development Secretary Mel Martinez says, but "We've got a ways to go."

Housing advocates say the gains in minority homeownership were due not only to lower mortgage rates but also to growth in subprime lending, which allows buyers with less-than-stellar credit records to buy homes at a higher interest rate.

Also, governments and community groups have increased efforts to bring minorities into the housing market, they say.

"A lot of people don't think they can buy a home, so it's a matter of re-educating them," says Wayne Hodges, president of the D.C. Metropolitan Association of Housing Counselors. Economists say for minority homeownership to continue rising, mortgage rates must stay low. In a survey by USA TODAY this month, three out of five economists said they expect the average 30-year mortgage rate to rise above 7.25% this year, up from just below 7% in 2001.