| Addressing Home Ownership Challenges for Minorities
By Dave Nielsen, CEO, Home Builders Association of Metropolitan Portland
Homeownership for minorities continues to lag behind the national average in the Portland area, in Oregon, and the nation as a whole. As a trade association for the home building industry, it is a challenge that the Home Builders Association of Metropolitan Portland (HBA) and the National Association of Home Builders (NAHB) are working to address.
Nationally, despite recent gains in the ownership rates for minorities, the homeownership rate for African Americans is 20 percent below the national average. This is according to a new joint policy report on housing released recently by NAHB and the NAACP. The report, called “Building on a Dream,” examines the state of minority housing, examines barriers to housing choice and affordability, and offers recommendations for what should be done to lower these barriers.
Nationally, the overall homeownership rate is 66 percent. Broken down by ethnic groups, the rates are as follows: 72 percent for whites; 46 percent for Hispanics; 46 percent for African Americans; and 53 percent for Asian/Pacific Islanders.
Locally, the gap between minority homeownership rates and the white ownership rate is as bad or worse. According to the most recent figures from the HUD Oregon office, the overall ownership rate in Portland is 56 percent. The African American homeownership rate in Portland trails the white rate 38 percent to 59 percent. The Hispanic rate is even worse: 30 percent. The only minority group that is close to the white ownership rate in Portland is Asian/Pacific Islanders at 55 percent.
The NAHB/NAACP report also reveals that half of all African Americans live in unaffordable, inadequate or crowded housing. Ownership opportunities in major metropolitan areas for workforce housing for minorities, even for those working in important community occupations like police officers, teachers and firefighters, is of particular concern.
The report outlines five barriers to housing choice and affordability for minority families. Those include:
- A lack of homebuyer education for minorities;
- Excessive development regulations that drive up the cost of housing;
- Predatory lending practices that increase the cost of mortgages and the risk of default;
- Restrictions on multifamily housing that diminish the supply of moderately priced for-sale and rental housing; and
- Fair Housing Act violations that diminish minority families’ access to quality housing in many neighborhoods.
To address these barriers, the NAHB and NAACP developed a set of nine policy recommendations. You can read the entire report and all nine recommendations by visiting www.nahb.org/buildingonadream. But I’d like to look at three of them as they relate to activities the HBA here in Portland in engaged in.
1. Provide comprehensive home-buyer education developed and promoted by public and private housing market participants. When HBA began discussing the need for better education for all home buyers generally, and minorities in particular, we decided we didn’t need to “reinvent the wheel” when Portland had one of the best models for this effort anywhere: the Portland Housing Center. Over the past several years, we have helped with funding for their efforts to education homebuyers.
For example, the Home Builders Foundation, our charitable arm, helped them a couple years ago with at $15,000 grant for their “Coaches Project.” This new program matched existing African American homebuyers with others who were looking at home ownership, providing them with a mentor through the process. And just last summer, the Home Builders Foundation, gave another $20,000 grant to the Portland Housing Center to help their Home Owners Basic program. You can learn more about the great work they are doing by visiting their website, www.PortlandHousingCenter.org.
2. Ensure that state and local regulatory activities do not – regardless of intent – violate the Fair Housing Act by disproportionately pricing minorities out of the housing market. HBA’s three government affairs specialists review new regulations and fees that are proposed by local governments every day, and one of the things they examine is the impact of those regulations on the ability of minorities to purchase homes in those communities;
3. Encourage government legislators, regulators and administrators to accommodate a range of housing types that meet the needs of families across the economic spectrum and to acknowledge the importance of housing opportunity in their decision-making. As HBA works with Metro, local counties, and cities, on their zoning and land use regulations, the ability to provide a range of housing types and prices is always an important factor. It is even more so as housing prices continue to rise.
In addition to these efforts, HBA is participating in a new Steering Committee Co-Chaired by Portland’s Mayor Potter and Commissioner Sten called Operation H.O.M.E. (Home Ownership & Minority Equity). Building on work done by the Housing and Community Development Commission, and working in conjunction with the Portland Development Commission, the goal is to close the minority homeownership gap by creating 13,000 new minority homeowners over the next 10 years.
At the first meeting of this Steering Committee, a diverse range of invited participants heard some of the barriers and challenges in addressing this issue. Some of them mirrored the barriers outlined above in the report issued by NAHB and NAACP. Some of the challenges expanded further.
For example, part of the lending problem deals with traditional lending practices not recognizing some of the differences other cultures have in demonstrating credit-worthiness. This may not be a predatory lending issue, but it does deal with an inherent problem in our systems in using approaches that work for the majority without considering how to adjust them for various minority groups. Several lenders are part of this Committee and readily recognized the roles they can play to help address these kinds of challenges.
The Steering Committee identified four main areas of focus: 1) loan and underwriting issues; 2) outreach and marketing issues; 3) education and counseling issues; 4) affordability and wealth creation issues. There will be several meetings over the next year, and it was clearly stated by all that these should be action and result oriented, not just discussions.
HBA is very committed to improving homeownership for all Americans, and particularly helping narrow the gap in home ownership rates for minorities. This has been a strong issue for us for several years now, and our work with the Portland Housing Center and several minority-focused housing opportunity fairs are outreaches of this mission. We are pleased to be a part of this new Task Force and hope to be a strong contributor to solutions to the challenges faced in this market – particularly in our areas of expertise, housing affordability.
For more information on Operation H.O.M..E., visit www.operationhome.net.
I would also encourage you to take a few minutes to review the entire NAHB/NAACP report: www.nahb.org/buildingonadream. The 50 page report is an excellent overview of the state of homeownership for minorities in America. It also contains good recommendations on what we, as a community, need to do to improve ownership opportunities for minorities. The HBA is very thankful for our national association, NAHB, and their partnership with the NAACP to put this report together.