The Urban Institute, the National Association of Realtors® (NAR) and the National Association of Real Estate Brokers (NAREB) have put together a five point framework outlining the major areas on which they can focus to rectify the disparity between the national home ownership rate and the minority home ownership rate, particularly of that in the black community.
The statistics are clear: the national home ownership rate is 63.2 percent and black and Hispanic homeownership rates are well below the national average, with 41 and 45 percent, respectively.
Home ownership rates declined among all populations after the 2008 financial crisis, although black home ownership rates haven’t improved on any significant level since then—or much at all since 1968.
Fred Underwood is the director of Federal Policy on Diversity and Inclusion for NAR, and says that this issue needs to be raised as a national priority.
“This is a potentially a national crisis coming down the road. Because African Americans, Hispanics, Asian Americans, and other minorities are going to make up the majority of home buyers, and if the home ownership rate doesn’t increase, then our national home ownership rate decreases and we have the potential of ceasing being a home ownership nation,” he said.
A lot of emphasis on home ownership rates has been placed on access to finance, which Underwood said is necessary, but not sufficient. The new framework anticipates five other areas where the housing and research industry can be active in order to collectively address black home ownership, which faces more severe obstacles than those in other communities.
The first of these five areas is working at a local level and strengthening the efforts of community involvement corporations and local finance agencies. The same solutions won’t work in every area, so the group wants to address issues around land use, building codes, property taxes, and the kinds of questions that impact the ability of builders and other parties to build new housing and improve existing housing.
The second area is housing supply and affordability, which has already been a big issue on the national stage recently. This overlaps with some things like land use, but Underwood says there also needs to be a focus on how groups can help investments that are targeted toward historically segregated communities, and how improvements can be made to housing units, particularly unoccupied two- to four-unit housing.
In terms of making access to finance more equitable, Underwood says that all the groups are advocating on some level for the ability to use evidence such as a person’s payment and credit history as a positive indicator of their credit worthiness, things that have typically only been considered when negative.
There are millions of mortgage-ready millennials, and Underwood said they aren’t buying homes because of misperceptions about down payments and whether or not home ownership is a good investment, combined with the fact that they saw what happened in 2007-2009 and are understandably skittish about putting themselves in a position where their homes could be lost. Because of this, outreach and counseling to current renters is a part of the framework with potential to make an enormous impact on home ownership rates in the black community.
“It’s really trying to talk to them again,” Underwood said. “As people start worrying about the escalating rents, owning your home is one of the best tools you have to keep your housing costs consistent over time.”
The last framework that the collaboration wants to address is sustainability, so that homeowners are able to remain in their homes during the fluctuations of their personal circumstances as well as through the ups and downs of the housing market.
The House Subcommittee on Housing, Community Development and Insurance recently held a hearing to examine racial disparities in American homeownership. Several witnesses testified at the hearing, including Jeffrey Hicks, president of NAREB, and JoAnne Poole, Vice Chair of the National Association of Realtors®’ Multicultural Real Estate Leadership Advisory Group.
“If America is to remain a nation of homeowners, we must address the persistent barriers that minorities continue to face. NAR is working to close racial homeownership gaps by encouraging local governments to adopt zoning laws, building codes and other policies that encourage free market production of entry level homes and other affordable housing units,” Poole said in her testimony.
In order for the initiatives and efforts to succeed in each of the five priority areas, there needs to be a willingness of all parties to come back to the table frequently to evaluate the successes and failures in each area. There’s a sense of urgency behind their efforts, and seeing positive impacts that technology, local financing options, and zoning solutions have had on local populations are encouraging for the country as a whole.
“We want to see a national focus, we want to see a multifaceted approach that involves federal, local, and state, and the housing community to work together, but it doesn’t have to be one grand program. There’s lots of little pieces that contribute to the effort,” Underwood said.