Closing the Widening Racial Gap in Housing

It’s a jarring reality that the Black homeownership rate has hardly changed since 1968, the year the Fair Housing Act banned discrimination in real estate practices. Industry thought leaders kept coming back to that fact Thursday during a Facebook Live event, “The Past, Present, and Future of Fair Housing,” hosted by the National Association of REALTORS® and The Memorial Foundation, which benefits The Dr. Martin Luther King Jr. Living Memorial in Washington, D.C.

The data illustrates that racial equity in housing is far from realized in this country. Moderator Soledad O’Brien, an award-winning journalist and documentarian, set the tone when she said near the top of the program: “Our society will not truly be equal until every family can live where they choose no matter their race or background.” And O’Brien said NAR members are in a position to effect change: “REALTORS® can build the diverse, inclusive neighborhoods Dr. King dreamed about.”

The current environment for change in housing policy is a friendly one, said Secretary of Housing and Urban Development Marcia Fudge, noting that HUD was the first government agency to get behind  President Joe Biden’s executive order on combating discrimination on the basis of gender identity or sexual orientation. In February, HUD announced it would begin including sexual orientation and gender identity as protected classes.

“The president has asked his administration to look at everything it does through an equity lens,” Fudge said at Thursday’s event. She added that HUD has gone through a process of admitting that its own past mistakes contributed to racial inequities in housing. “We plan to correct the problem,” she said.

Society faces a pivotal moment in the road to equality. While racial homeownership gaps are stark, they’re expected to only get worse, said Sarah Rosen Wartell, president of the Urban Institute, a social and economic policy research firm. Over the next 20 years, the think tank is forecasting that the national homeownership rate will drop 3%, more among African Americans. “Younger generations of color will feel it the worst, renting in a market with huge supply constraints,” Wartell said. “Barriers to wealth are made worse when you’re paying 30% of your income to rent.”

Changes to lending and financial systems are necessary now to stem some of the fallout. Janis Bowdler, president of JPMorgan Chase & Co. Foundation, discussed ideas in both policy and practice that can help achieve greater equity. For one thing, she said her company created policies to diversify its workforce by hiring from communities of color where it intended to do more work. “Not only do we cultivate a diverse workforce but one that really understands the communities in which they’re underwriting mortgages,” Bowdler said.

Bowdler and Wartell offered other ideas for advancing equal opportunity in housing:

• Change mortgage broker compensation models so that smaller mortgages aren’t disadvantaged.
• Build new government programs to leverage alternative credit-scoring data and remove bias in the appraisal process.
• Use the Neighborhood Homes Investment Act, which is part of President Biden’s infrastructure proposal, to create a federal tax credit that would incentivize the closing of the valuation gap between certain neighborhoods.
• Create a federally backed down payment assistance program that can more equitably distribute funds and better target consumers who need help.
• Reinstitute Affirmatively Furthering Fair Housing requirements.
• Bring about more flexible zoning and land use regulations.
• Set national standards for evictions and foreclosures that enable consumers to keep their homes without more debt accumulation or ruining their credit scores.

“We have to unlearn some lessons that weren’t right coming out of the 2008 financial crisis,” Wartell said. “Too many came out believing that low- and moderate-income households and households of color couldn’t be successful in homeownership. And our credit models and our policies today have built that lesson in.”

Calling for a unified front against discrimination, NAR President Charlie Oppler acknowledged that, despite NAR’s past wrongs regarding housing policy, the association puts fair housing at the top of its priorities today. “I’m proud that NAR is an industry leader committed to the belief that everyone has the right to live where they choose,” he said.