The path to homeownership is different for every person. It can be more challenging as the first person in the family to buy a house, someone who earns minimum wage, or has a felony conviction. And obstacles in the housing market can be unpredictable.
Last year, Governor Tim Walz signed a bill to invest $1 billion in advancing housing opportunities, increasing financial assistance, and building new homes. But what are real estate agents of color saying about the prospects of buying a home?
We spoke to three about common questions and challenges in the homebuying process. A real estate agent can help homebuyers search for property listings, facilitate sales, and assist in navigating financial difficulties.
Adriana Martinez has been a real estate agent since 2007. As the president of the National Association of Hispanic Real Estate Professionals Twin Cities chapter, Martinez leads community outreach efforts as well as educational and business networking events. Her term ends next month.
Tre Adams is a real estate agent and a managing partner of the Signature Group, which is a Minneapolis-based agency dedicated to helping families build generational wealth through buying, selling and investing in real estate. Since 2019, the Signature Group has helped over 700 families with buying and selling real estate.
Nalee Vue has launched her own real estate agency. She has been an agent for about six years. Her agency, Superb in the Urbs, offers services to help clients buy and sell properties, and is also dedicated to closing the racial homeownership gap in Minnesota.
In our conversations, we highlight their expertise as real estate agents of color on topics such as housing market predictions, preparing to buy a house, and making realistic goals.
The responses below have been edited for length and clarity.
What are the biggest lessons your clients learned last year from the housing market?
Vue: Prepare their credit in advance. Prepare their savings and fundings in advance. Prepare a Plan A and Plan B. Last year, the interest rates changed so much. A lot of homebuyers, Hmong homebuyers, were not prepared for that. I saw a lot of homebuyers regret not putting in an offer when it was affordable. I feel like the greatest lesson was to buy when the rates are affordable and they can still afford it instead of waiting and waiting and waiting, hoping and waiting for the housing market to go down or crash. That was the greatest lesson I saw.
Martinez: Right now, we know the normal United States interest rates are about 7 to 8 percent. However, during the pandemic, the rates were really, really low. Many of my clients were expecting to see lower interest rates last year. But as Realtors, we don’t foresee the interest rates this year being severely low. We’re expecting 7 percent or in the high 6 percent. The biggest lesson is understanding the new normal in interest rates, not expecting them to be low again.
What trends or obstacles do you anticipate seeing this year? How should homebuyers prepare for them?
Adams: Interest rates are going down a little bit. Houses are going into multiple offers. Clients are understanding that now is the right time to buy a house, like in 2020 and 2021. There’s also a lot of resources coming out, particularly the first-generation downpayment assistance program. That is going to be putting clients in a better position to purchase a home and make competitive offers.
Vue: We do have about two months worth of inventory [which is the current rate of home sales] right now in the Twin Cities. The biggest obstacle with that is, as the inventory increases, there will be more options, but also there will eventually be more buyers coming back into the market. Therefore they may be facing multiple offers. They may also be facing the obstacle of appraisal [the value of the house] and the purchase price not matching, possibly resulting in the buyer having to pay the difference.
related sTORIES
What are common misconceptions about the homebuying process that you see from communities of color and immigrants? How do you respond to those misconceptions?
Adams: I don’t necessarily see misconceptions. I have a client who was in jail for a long time and they think it’s going to take them forever to buy houses, or a felony record means they can’t buy a house. But they’re working and have a W-2 job, so they have income on payroll. This person has a great credit history. We have an explanation on why they were out of work, but that doesn’t stop them from purchasing a home.
Vue: The first misconception is: “If I’m self-employed, you know, 1099 [tax form], then I can’t buy a house.” Well, if you have two years’ worth of tax returns of their business, it’s possible to buy a house.
The second one, “I’m on Social Security income, I don’t know if I can buy a house.” This person can co-borrow with a family member who is working to actually increase the income to buy a house.
Three, “I don’t have enough cash to buy a house. I have to put down 10 to 20 percent.” That’s a major misconception that holds many people back from building generational wealth. There are a lot of homeownership resources out there, including Minnesota Housing downpayment assistance and different city downpayment assistance programs, which is typically around $10,000 or more. There are also different lenders who provide grants for homebuyers that are given out for free. There are also different loan programs that allow low-credit homebuyers to put down less money for a loan.
There’s been a huge emphasis this year on helping first-time homebuyers, especially people who are the first in their family to buy a home.
What are the unique needs of those buyers and why does that matter?
Adams: Well, it stems a lot from lack of education, especially in today’s society, even with school. A lot of the stuff that we teach, these clients were not taught growing up. Their parents weren’t taught how to buy houses, and their parents weren’t taught how to buy houses. It’s the generational curses that people face, especially with Black people. I just met with a Black client yesterday who is getting ready to buy a house and he said his first real estate agent steered him to buy a house directly in north Minneapolis. A lot of the barriers that we’ve dealt and overcome, we still continue to face to this day.
Luckily, my team and other Realtors of color are doing speaking engagements and educating our clients because of all the stuff we weren’t taught in schools to pass down to future generations. The first person that buys a house in their family is breaking that curse and they’re able to pass that down to their kids and onto their kids.
The opportunity to buy a home seems to be growing more distant for many people because of the rising costs of homes and rent. Help us better understand that.
What can prospective homebuyers expect right now and what resources are available to help them?
Martinez: Certainly it’s more challenging. Inventory is low. But it’s not impossible if you follow all of the guidelines from your lender that has approved your loan. You should be okay. Your realtor should also be there to guide you. You’re going to be shown all kinds of houses, but it’s you and your lender who will determine what type of house you’re going to buy. Right now, the median housing price hasn’t changed that much, but it’s not impossible to find slightly lower home prices. The process of home buying will just take longer.
Adams: We just have a realistic conversation with our clients and get them to understand that: One, this first house is just a stepping stone. More than likely, it’s not going to be your forever home. And I always explain my past experience when I bought my first house at 29 in 2014, and what that has done for me. I tell them my experience and I understand that the prices of houses have gone up. Interest rates are high, but they’re also high on cars, which is a depreciating asset. There’s also high interest rates on credit cards. So you got to pick and choose your battles, and also what honestly makes sense, you know?
We look at the possibilities of what homeownership can do. Whether they’re looking at buying a multifamily investment or if they’re looking to buy a single-family home. A majority of my past clients are now stepping up. Now, they’re making more money. They have equity to be able to buy their next and bigger home, or pay off debt. This is the educational piece that we’re constantly explaining to clients so they understand and get it.
What should buyers keep in mind when faced with a competitive market where houses are scarce and competition is stiff?
When should buyers walk away from a house that meets some of their needs but isn’t their “dream” home? What kinds of compromises should buyers be open to when deciding whether to buy a home that meets some but not all of their criteria?
Vue: It’s very very common right now for multigenerational families, especially in the Hmong community, the main things they’re looking for is affordability, location, size of the house, and land because they want enough parking for cultural events. They also want to know if someone has passed in the house because of traditional beliefs. It’s also important that there’s a bedroom on the first floor for the grandparents.
Even if my client finds a house that has everything—right location, style—but it doesn’t have maintenance, they should never settle for that. I recommend my clients to not buy a house that needs maintenance right away because it’s going to cost them even more money out of pocket. If it’s going to cost you a lot of money to bring the house up to par, then it’s not worth it.
In addition, buyers should keep in mind that they should never overpay. Your Realtor should never lead you into a bad place, so a house with no equity [the total value of the house minus total liabilities]. If a seller isn’t willing to make repairs or allow an inspection, that should never happen.
Martinez: What I advise my clients is to see what is the most important for them, and see if they can really live in that house. If they cannot really, really live in that house, because they really don’t like the house, then we just move on and go and see the next one. But I recommend my clients to be open minded because the budget is limited. They have to be open minded on what the market can offer to them. So far, I have had very happy clients and all of them are in one way, not only compromising on what they find, but they also know what is important for them. So, I would say just put your priorities in place.
How can people start planning and saving right now to buy a home in the next few years?
Martinez: First, it’s important that the client has regular income that can be verified by a lender. If you can, start looking at houses online and thinking about the kinds of houses you like, to be mentally prepared. Also, start saving for the future to put as a down payment. Talk to your lender who can help guide you on financial planning and figuring out the best loan because once you buy a house, you’re going to have monthly payments.
Vue: I definitely recommend consulting with a lender and Realtor first. A Realtor helps give you a roadmap on how you’re going to buy a home and connects you to resources. A lender looks into your credit and helps you find what’s helping and hurting your credit. Also, a lender can help you know what’s realistically affordable. When a client knows all these things, they’re better prepared and equipped to understand their debt, how much to save, and afford monthly payments. Starting there is the best way for the learning process.
