Rising mortgage rates and lingering inflation are forcing many Americans
to put plans to buy a home on hold. That, in turn, is pushing up
rent prices for others, and no one has experienced that more more
acutely, rather over the last year than people of color, As economics
correspondent Paul Solman explains as part of our series race matters.
My baby don't care.
Nine or 10 carat stone
after a lifetime of performing the world over Lily Adams. 74 is back
in her hometown, one of more than 59 million Americans, 18% of us
living with family, her daughter and son in law in suburban Detroit,
But she needs her own place.
And it better be a house
for me. I can't like stay in any apartment because I make noise.
You know, I have to play.
If you have an apartment, you'll be making too much noise for the
neighbors. Is that it need a place like this place if possible.
And, uh, probably would teach. Go back doing some teaching, too.
And nobody wants to hear that.
Adams says she can afford a $100,000 home in the up until recently
bargain basement Detroit market their houses to be found that the
problem is finding
The financing for these houses. That's because of spiking mortgage
rates, which have doubled in a year. They started incrementally going
up, up up up.
Until it it reached a tipping point and
Making it just impossible enough money for a fat down payment, of
course in rates wouldn't matter so much.
But black Americans like Adams were actively prevented for decades
from building home equity, the bulk of the wealth based for most
other middle income Americans from the 19 thirties to the sixties,
the federal government embarked and redlining, which was a racially
explicit housing policy that provided home loans to white families,
and denied those same loans to black families.
Thus, says housing researcher Rahim Hanifa Detroiter himself. Blacks
have too little equity to cash in for a down payment. And now suddenly
the mortgage rate spike. You'll see that there's been a decline of
52% in home affordability for black households, even in bargain basement
77% Black Detroit.
Detroit is one of those cities that is no longer affordable to low
income families like the family of Post Office employee Angela Smith
renting the last four years. She needs to put down only 3.5% because
of a government program. But she explains, you know, you try to stay
on top of the bills that you already have. And then you're trying
to save money to buy a house.
I mean, do you not eat? Do you not pay your rent, then gas went up
to $5.
So what do you do You not put gas in your car to go to work. The
interest rate surges, killing her budget already.
What's more, Smith needs that car just to get to her job and the
interest rate on that car is terrible. It's like 19.49%. I'm paying
on that car.
I'm paying 6.6 59 a month for this car mortgage rates are crushing
folks like Smith. Best offer we could find online for $100,000 House,
her 6 40 credit score of 15 Year mortgage with a 6.3% interest rate
$788 a month on a salary of less than 40,000 year.
Before taxes, union dues, etcetera.
But of course, it's not just for homeowners of color that mortgage
rates are discouraging. Samantha McSherry, for instance, we've set
a budget.
And now with interest rates, you know every few weeks to a month
or so going up.
And us not finding a home every few weeks to a month it you know,
it makes us want to stay where we're at and not, you know, Got not
get in this rat race.
I'm Ed Butler. If you're new to the channel, I make videos about
living, working, sleeping, eating and playing in Detroit. Real estate
agent Ed Butler takes to YouTube to help buyers navigate the Detroit
market. But with the new mortgage rates, says Butler for buyers who
were shopping in a certain price range, Um they no longer can afford
the payments.
So there, you know, deciding to either rent or just stop there, surgeon
at all.
Ah, deciding to rent. That's the less told story of higher mortgage
rates nationwide. The median rent is up 24% in the past year to about
$1900, a record high for the 16th straight month. Interest rates
going up so dramatically. There are fewer people looking to get a
mortgage and more people who are currently renters ending up staying
renters Peter Hepburn of the Princeton Eviction Lab, and that means
more competition for
A limited set of rental housing, and this is an added problem for
those just getting by. In an era where increasingly, landlords are
investors, the share of new purchases for rental housing that are
coming from investors has been increasing steadily over the last
decade.
The problem is, those investors have few qualms about raising rents,
and thus more evictions and evictions are picking up in Detroit,
including among smaller landlords like the one that's Tenants Group
has organized to resist being evicted for a late payment and rent
in April. 32 year old David Chavarria is a sanitation worker in Detroit
Sewage industry. He paid his rent, but basically what
Their lawyer said was now I'm causing a ruckus in the building.
Well, are you causing a rocket?
Yes, we were resisting rent raises based off of the condition of
the building. The elevator was out for eight months.
And for us that live on the fourth floor. That's it's pretty pretty
significant fact is, says Jeff Area, A lot of people on our streets
can't afford to pay the increases in rent. But because of the hot
rental market, others can 71 year old Luis Bass, a retired chef,
has lived here for 15 years, but recently
New management took over. So they're just trying to force you out.
We are being forced out.
To be replaced by somebody who's willing to come in and tolerate
the conditions as they are people going on to buy their homes means
more people. Staying renters means more competition for limited apartments,
even in if he conditions
The new management's response. Inflation is killing everybody right
now, so you have to continue to raise rents on a regular basis. Otherwise
you wither and die. The landlord says he fixed the elevator and insists
that the only evictions are for nonpayment of rent. Meanwhile, in
recent weeks as interest rates continued to climb,
Housing prices have finally stopped rising in the market. We started
to see a lot more price decreases and price drops
than we have in the last few years, so naturally that average price
point it's going to either stabilized or pull back again. Detroit
realtor Ed Butler. The rest of the country is experiencing a slight
cool off US.
We're doing it a lot more because we have a little more inventory
than the rest of the country does good For buyers like Samantha McSherry.
We go to see these houses and when we're finally crunching numbers
and saying, Okay, we want to do this. We want to do that. We like
this house yada, yada yada.
Then you get to the point where your interest rate is now, you know,
two and 3% higher than what we're currently paying. So is it really
going down or is it just kind of shifting over
You know. So who are we paying more to the seller or the mortgage
company? I guess if you buy now, and mortgage rates eventually go
down, you could refinance at a lower rate.
So might not give hope to those like Lily Adams. Do you think you'll
be able to buy a place?
Yes, eventually. Yes, I believe so. How So? I mean, is it just because
you're that kind of person? That kind of person,
baby, Let's wish her luck. Pbsnewshour Paul Salman enjoying my first
interview concert as I hope you are.