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A pair of reports highlight the role of race in homeownership in South Carolina

Buying a house is getting tougher across South Carolina's demographic spectrum, but borrowers of color are feeling the bigger brunt of eroding affordability.

On the upside, if you're white, African American, or Asian American, you’re more likely to own a home in South Carolina than in pretty much any other state.

A report released Monday by the National Association of Realtors (NAR) shows that in 2022 South Carolina was the top state for Asian American homeownership rates – 74% – and had the second-highest rates of ownership among Caucasian and Black populations, behind Delaware and Mississippi, respectively.

The difference between those latter rates of homeownership, however, was significant. In 2022, NAR found that the homeownership rate among white residents was 79%, while the rate of homeownership among African Americans was 56% – which also was the rate of homeownership among Hispanic residents, the typical rate for Hispanic and Latino residents in the South in general.

Across the racial spectrum, NAR found a growing lack of affordability and an increasing rate of mortgage application denials in 2022, compared to years prior. For Black and Hispanic renters and buyers, the numbers look especially bad in several categories.

Mortgage denial rates among South Carolina’s Hispanic borrowers in 2022 was 22%, while denials for Black borrowers was 30%. Both rates were the fourth-highest in the United States, and they compare with 14% and 15% denial rates for Asian American and Caucasian applicants, respectively.

Denial rates did not improve into 2023. A report by the South Carolina Department of Consumer Affairs (SCDCA), also issued Monday, shows that one in five mortgage applications last year were denied. That’s the highest rate of denial among mortgage applicants in South Carolina since 2018 and it continues an uptick in mortgage denials from 2022.

SCDCA also found that South Carolina’s average credit score dropped to 720 (the very beginning of what is considered the excellent credit score range) from three consecutive years above 730. Two-thirds of denials were attributed to low credit scores and high debt-to-income ratio, or DTI.

SCDCA found that South Carolinians’ average DTI in 2023 was the highest it’s been in the past decade.

The agency did not break down 2023 mortgage denial rates or credit scores by race, but it did look at race in mortgage applications. It found that 71% of mortgage applications were filed by white borrowers, 24% by African American borrowers, and 5% by “other” borrowers – all of which essentially mirrors South Carolina’s racial demographics.

SCDCA also looked at gender in mortgage applications and found that 40% of South Carolina mortgage applications were filed by women in 2023. This is up less than one percentage point from 2022.

While SCDCA reported that the average home loan ballooned to an all-time high of $286,652 in 2023, NAR reported that the amounts of money renters from different ethnic groups could afford to spend on a house were wildly different.

According to NAR, Black South Carolina renters could afford to spend the least on a house — $128,490. That compares to $186,520 for white renters, $203,440 for Hispanic renters, and $225,300 for Asian American renters.

Black and Hispanic households in South Carolina also had the highest likelihood of being housing cost-burdened – meaning they spent 30% or more of their total household income on household expenses. While 16% of white households and 18% of Asian American households were found to be cost-burdened in 2022, a quarter of Black and Hispanic households spent at least 30% of their incomes on housing.

NAR also found that Black and Hispanic homeowners had the highest rates of mortgages above 6% APR in 2022, when the average mortgage rate was still below 4%. One in five Black and Hispanic homeowners paid mortgages with annual percentage rates higher than 6% in 2022, while 17% of white homeowners and 16% of Asian American homeowners held mortgages with similar rates.

Mortgages have already grown much more expensive since 2022. SCDCA found the average mortgage loan rate for borrowers in the state last year to be 6.7%. SCDCA data suggest that this could be a factor in the rise of mortgage applications for manufactured homes in 2023 – up from 4.1% to 10.5% since 2022.

Scott Morgan is the Upstate multimedia reporter for South Carolina Public Radio, based in Rock Hill. He cut his teeth as a newspaper reporter and editor in New Jersey before finding a home in public radio in Texas. Scott joined South Carolina Public Radio in March of 2019. His work has appeared in numerous national and regional publications as well as on NPR and MSNBC. He's won numerous state, regional, and national awards for his work including a national Edward R. Murrow.