[image_credit]MinnPost photo by Peter Callaghan[/image_credit]
June is Homeownership Month and it cannot be missed that Minnesota has one of the highest homeownership rates in the nation. For white households. And one of the worst racial disparities in the nation with black households owning homes at 26%. This has been well documented and discussed, as leaders have prioritized this conversation. A statewide scorecard was launched earlier this year to keep track of our progress on these very issues so the talking turns into action, and yet we have not improved this gap. In some areas, we’re seeing the issue worsen as home prices increase and wages remain stagnant.
A few articles have begun to highlight the connection between systemic racism and affordable housing, even affordable homeownership. Affordable homeownership advocates have known this for decades; it is one of the key reasons for our work. We know it is true that affordable homeownership has been out of reach for communities of color, and we know it is true that our state (and many others) have used racist policies to keep it out of reach. The Mapping Prejudice project has been recording these intentional efforts and continues to find more through deed restrictions and covenants.
Counseling and coaching aren’t enough
In an attempt to solve these inequities, we’ve focused on financial literacy training, coaching and goal-setting programs, social service supports, homebuyer education … and many other things that are designed to educate, empower, support and lead to success in homeownership. These are all good things – knowledge is power and an informed, educated consumer is more successful in the market. Housing and financial counseling and coaching are valuable and important tools – but they are not enough. If they were, this opportunity gap would be closing, and it is not.
[image_caption]Cristen Incitti[/image_caption]
Even if our lending partners offer new products that are also safe for consumers, we still have a supply problem. The median sales prices in April for a Twin Cities home is $315,000, with the average sales price for the state reaching $305,000 according to the Minnesota Realtors ® April Housing Statistics report. Basic economics will tell you that to decrease price, we must increase supply. Developers, funders, and communities need to come together to increase the number of affordable homeownership opportunities created in our communities.
The Legislature’s role
In special session, our legislators should focus on a bonding package — one that includes housing infrastructure bonds with an expanded use for single-family affordable homeownership development. As they consider what supports our economy will need post-COVID, we need our state to invest in resources that keep people in their homes – funding for foreclosure prevention counseling, grant programs for homeowners to cover missed mortgage payments, and deeper investments in homeownership production.
Now and going forward, we must center increasing access for Black, Indigenous and communities of color when making policy and funding decisions regarding affordable homeownership preparation, production and preservation. Philanthropic and public partners must support increasing supply through production, along with supporting down-payment assistance funding and housing counseling programs. These programs have worked before; when combined with an increase in supply, we can increase access and opportunity.
We need to continue to invest in these resources and tools, while also looking at the homeownership system and what changes need to be made as we work toward creating a more equitable housing market.
Cristen Incitti is the executive director of Habitat for Humanity of Minnesota (@HabitatMN). Habitat for Humanity has been creating affordable homeownership opportunities in Minnesota for more than 30 years.
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Thank you for this article. We need smaller and more affordable homes in a number of areas. Not just apartments and condos; but small to moderate homes that people can build equity in. On one hand, we don’t want people to buy if they can’t afford it, on the other hand, how can we work to make it more obtainable? More assistance on down payments, looking at regulations for example on required lot size. The reality is that even with an income of 100,000 people can’t afford the 300,000 threshold especially when you add in property taxes. There needs to be more focus on this.
Another good article on a critically important aspect of discourse about race. This article and many others, though, fail to connect all the dots and help us understand exactly why rate of home ownership drives lifelong economic disparities between races.
We bought our first home in 1971, for $22,900. Don’t remember with certainty, but probably no more than $3,000 of that was our own money; the rest was the bank’s money. All these years, and a few houses later, that $3,000 has grown to 111 times that amount in home value. Of course the current value of our house is a meaningful percent of our overall net worth.
Lack of access to that kind of home value appreciation has to be at least as harmful to a family’s ability to accumulate wealth as other factors such as lower pay.
Let’s also be clear about equity in home ownership in Minneapolis. The 2040 plan makes that even harder. Developers can easily outbid the owner-occupant buyers of the cheapest single-family homes in desirable parts of the city. And often that steep acquisition cost STILL makes high-end new construction triplex rentals more profitable than getting cheap or free land over north to build on.
When residents asked a Minneapolis city planner how 2040 would address these home ownership disparities, we were told that home equity as a generational wealth-building tool was obsolete.
So if you want to talk about home ownership and racial equity in Minneapolis, that conversation MUST include condemnation of the city council for pushing a plan that ignores the poorest communities entirely and makes ownership less attainable everywhere else.
And, once you own or bought a home there is an entire new line of responsibilities maintaining and keeping up the property less it fall into disrepair and make the overall problem worse rather than better.
Want a model, suggest that renters are allowed to enroll in a program where they receive a credit to an account for every month of rent paid, say $50-100 after 10 years they have a fund of ~ $6-12K which can be used to purchase a property. The real issue is that many inner city properties are owned by folks that don’t live in the inner city, so large chunks of inner city wealth are transferred to first and 2nd ring suburbs etc. monthly. That model needs to be changed in order for the overall system to be changed. Folks also need to be willing to commit to home ownership, i.e. that value has to be higher than the desire to be able to move at the drop of a hat. Its a multi sided deal, and it would be better if folks looked at the entire picture than just focusing on what can the governemnt do side.