Minority buyers driving Maryland housing market

“If minority buyers were out of the market right now, that would cut the market in half,” said Jody Landers, executive vice president of the Greater Baltimore Board of Realtors. “That [market] is where all of the gains are to be had.”

Why?

“People are developing a level of confidence in the market,” he said. “For a number of years, because the city [of Baltimore] market in particular was not appreciating, people were hesitant to buy. But this little bit of a slow-down has given people more time to shop, and there are more choices and more inventory.”

Tom Shaner, executive director of the Maryland Mortgage Brokers Association, said minority home buyers also are benefiting from a growing number of mortgage products now available.

“There are products that allow for a more diverse population to have a wider credit-reference range,” he said. “There are products out there that make homeownership available to more people.”

Those products include interest-only mortgage payments, low payments for the first few years followed by ballooning payments, and other mortgage options that offer variety above the standard 30-year fixed-rate mortgage.

“People who previously would not have qualified for a mortgage now have more available choices,” Shaner said.

A recent report on mortgage trends by Genworth Mortgage Insurance and Compliance Technologies, “The 2005 Minority Home Buying Surge,” found the percentage of growth in all minority loans was three times greater than for white households. The increase for Hispanic, African-American and Asian households was up to five times greater than white households, the data showed.

But Shaner warned that just because mortgage products are available to a more economically diverse population, it doesn’t mean homeownership has become more affordable.

“I am not sure that folks who are taking some of these higher-risk mortgages fully understand what they are taking,” he said. “Nor am I convinced that mortgage professionals know what they are offering.”

Education, he said, is the answer, especially for first-time home buyers.

“It’s wonderful to have more people able to move into the American dream of owning a home, but there are some people who shouldn’t own a home,” he said. “You have to have an understanding of money, and of credit. Yes, I can get you a mortgage for nothing. But how long will it be for nothing, and then how much is it going to be?”