To many people in this country, homeownership is synonymous with the American dream. Homeownership provides for stable communities, increases civic participation, and builds our feelings of self-worth and self-esteem. In fact, studies have shown that the children of homeowners go on to earn more as adults.
But, sadly, stark racial disparities in the rate of homeownership demonstrate that this dream remains out of reach for countless families and potential home buyers across the U.S. For example, the rate of homeownership for African Americans has returned to levels not seen since before the passage of the Fair Housing Act fifty years ago. The National Association of Real Estate Brokers, Inc. has documented the issue through its annual State of Housing in Black America reports.
In response to this continuing crisis, NAREB, the National Association of Realtors® and the Urban Institute recently convened a roundtable focusing on improving African American homeownership rates. A five-point framework that can be applied across all minority communities emerged and continues to be developed as we work to increase homeownership levels for all populations in America.
First, and perhaps most importantly, we are determining how to effectively advance relevant policy solutions at the local level. In any effort to address housing affordability and accessibility, the focus of our second principle, we believe state and local governments must take the lead on actions that will create additional opportunities for aspiring homeowners.
Specifically, these potential solutions emphasize the responsible expansion of small-dollar mortgages for purchase and renovation; the reform of local land-use and building codes; and the potential expansion implementation of property tax relief for low- and moderate-income taxpayers.
Additionally, as new Federal Housing Finance Agency Director Mark Calabria outlines his organization’s plans to reform – and end the conservatorship of – Fannie Mae and Freddie Mac, NAREB and NAR see an opportunity to secure an equitable and accessible housing finance system. This is the third principle in our five-point framework. All responsible and creditworthy Americans must maintain access to affordable and sustainable credit, and no American should pay more for or be unable to secure a mortgage simply because of where they live or the color of their skin. Responsible reform will maintain these critical tenants of our housing finance system.
Despite fifty years of genuine federal efforts in these arenas, white homeownership rates of 73.2% still significantly exceed black and Hispanic rates of 41.1% and 47.4%, respectively. A focus on sustainable homeownership and preservation for this nation’s minority communities represents our fourth point.
While rates for African Americans have regressed in spite of the presence of Fair Housing laws, it is clear that various institutional challenges must be faced and defeated in order to truly solve this problem. Namely, all mortgage lenders, staff at servicing companies and real estate agents must understand the importance of this issue and the impact housing discrimination can have on our nation’s economy.
By strengthening post purchase counseling; funding programs to prevent foreclosure for low- and moderate-income and vulnerable families of color; and building tools that help create early-warning displacement triggers, we can ensure first-time homebuyers have the knowledge and the resources to remain homeowners for the rest of their lives.
Finally, we believe accelerating outreach and counseling for renters and mortgage-ready millennials will be key to get our next generation of homeowners in the position to purchase property.
That can happen by revitalizing and improving tax credit incentives for renters who want to become owners; by expanding programs that automate saving for down payments; and by expanding the reach and effectiveness of financial education and housing counseling courses
NAREB and NAR also strongly support the production of affordable housing and efforts to increase the supply of entry-level homes. We encourage states and municipalities to encourage African American home building entities, and we believe governments must consider the input of local experts as they adopt zoning laws, building codes and other policies that encourage free market production of affordable housing units.
If America is to remain a nation of homeowners, we must address the persistent barriers that minorities continue to face. NAREB and NAR’s policy solutions and proposals represent a critical and much needed step towards ensuring the American dream of homeownership is indeed available to everyone in this country.
For more information, go to www.nareb.com.