In the midst of rising rents, student loan payments resuming, inflation, and stagnant wages, we must build alternative solutions to the systems that are crushing marginalized people. Homeownership, which is the most reliable and sustainable form of affordable housing, is the place to start. We need bold action to undo decades of explicitly racist housing policies – and to implement solutions directly from the Black, Indigenous, Latine, and people of color (BIPOC) most affected by the housing crisis.
According to the Urban Institute, homeownership is the most reliable way for people of color to build generational wealth and financial stability. In fact, homeownership is the largest generator of wealth for families – more so than education level or even household income. But the racial landscape is grim. As of 2022, nearly 73 percent of white people owned their homes, compared to just 50 percent of Latines and 44 percent of Black people.
In contrast, more than half of Black and Latine renters are cost burdened, meaning they spend over 30 percent of their household income on rent.
Disproportionately high rent not only puts people in desperate straits – it pushes them further from opportunities to access homeownership and, therefore, wealth. Being unable to save money, missing rent payments, being forced to accrue debt and therefore unable to build good credit – these are the impacts of high rent that make the chances of qualifying for a mortgage slim to none. And those that do are at risk of being pushed into high-interest, predatory, or subprime loans.
One of the largest barriers to homeownership is not having enough cash for a down payment. The racial wealth gap here is glaring, with 46 percent of white homebuyers receiving down payment assistance from family, compared to only 10 percent of Black homebuyers.
These disparities didn’t miraculously occur. They are the byproduct of redlining and Depression-era housing stimulus packages by the federal government designed explicitly for white families and veterans. These practices and policies have kept Black families from building generational wealth that white families have been accumulating and passing down for over a century.
My work with Living Cities’ Closing the Gaps Network brings together local leaders in cities to implement programs and practices that can build BIPOC wealth. There is a plethora of groundbreaking work, ideas, and solutions sprouting from the community level in response to the housing crisis. One such idea is re-evaluating underwriting criteria to include regular and timely payment of common household expenses, to more accurately reflect one’s repayment potential.
Even more notably, there are alternatives to traditional ways of homebuying being implemented in cities across the country. Take Minneapolis, where 34.5 percent of young white adults ages 18-45 are considered mortgage-ready, compared to just 16 percent of young Black adults. Here, Youthprise is partnering with Living Cities’ Closing the Gaps Network to create a youth-owned live and work cooperative model – a project being designed by the youth who would benefit from it. This unique work addresses the racial wealth gap at the root, giving Black and Indigenous people a pathway to homeownership and allowing them to begin building equity for themselves and future generations at a young age.
In Orange Mound, a historically Black neighborhood in Memphis, residents are working to build a community land trust. By holding the land within a nonprofit run by and for the people of Orange Mound, community members will be able to create affordable housing and business opportunities in ways that meet their needs and allow them to thrive.
Earlier this month, Living Cities and the Urban Institute held a symposium to connect local housing and community organizations with federal government leaders to bridge knowledge gaps and ensure the voices of those most impacted are centered on housing solutions. This kind of information gathering and storytelling is necessary on an ongoing basis to address the pervasive disconnect between peoples’ material needs and housing legislation.
There is not a silver bullet that will allow everyone to buy a home, but we must shift systems towards making it an option for everyone. Alternative pathways to homeownership – which will impact BIPOC material wealth for generations – need to be funded, supported, and expanded by policymakers and philanthropic organizations.
