The gap between Black and white homeownership widened this year, according Harvard's annual housing study, released last week from the university's Joint Center for Housing Studies. A panel moderated by the Wall Street Journal's Nicole Friedman convened to talk about the findings and implications of the report. In reflecting on the findings, Marietta Rodriguez, president and CEO of NeighborWorks America, started by saying we have to think about this issue in the context of history.
"This slippage and gap are a direct result of structures that made it harder for communities of color to become and remain homeowners," she said. In recent history, Black households were hit harder during the housing crisis of 2008. They bought and borrowed at higher rates and took longer to bounce back.
"We know homeownership is one of the best ways to establish wealth," Rodriguez continued. "It's important to think about how to turn this tide." Her suggestions? Homebuyer preparation and counseling is one way, which she believes should be built into the mainstream as an expectation for first-time homebuyers. She also recommended doubling down on the things we know work, like down-payment assistance and advancing supportive housing policies.
Chris Herbert, managing director for the Joint Center for Housing Studies, said this year's report, which calls for a comprehensive revisiting of housing policy, isn't so different from the first report 32 years ago. The lack of homeownership for people of color and the lack of affordable housing were strikingly familiar. "Having a place to call home is fundamental for our wellbeing," he said. "That should be the bedrock of what it means to be American."
The pieces to help are there, he added. "But we haven't sat down and looked at them all in a comprehensive way." Herbert said one silver lining of the pandemic has been calling attention to the importance of home.
In going over the report, Daniel McCue, a senior research associate, talked about low income renters who had lost wages and gotten behind on rent. Homeowners weren't spared by the pandemic, either. Lower income individuals and households of color struggled more. While 7% of white households were behind on payments in mid-September, that number more than doubled for Latino and Black homeowners. Meanwhile, well-positioned households took advantage of low mortgage rates, and home sales rebounded quickly after the first two months of the pandemic.
It highlights the inequalities, McCue said. "The Black-white homeownership gap moved to a point larger than it's been in decades, to a 31 percentage point difference." Meanwhile, the cost in damages due to natural disaster reached $50 billion as of September. And families dealt with energy challenges. "It's put the spotlight on how precariously housed so many Americans are," he said.
Toby Bozzuto, president and CEO of The Bozzuto Group, a multifamily development company, added that the nation is currently in a perfect storm of colliding events: the pandemic, social unrest and the impact on climate change. "The rental market is quickly becoming a case of the haves and the have-nots," he said, as one group of Americans finds it easy to work from home, and the other group loses jobs or work hours. "That needs to be addressed on a national level." He said housing should be an integral part of any infrastructure bill that is planned. "We need an all-hands-on-deck approach."
His biggest takeaway from the report? "Humanity has been exposed now. This is our moment in time. We can make a difference. Now."
The pandemic began with an affordable housing shortage, Rodriguez emphasized. If these units can't be sustained as affordable units, she added, things will be worse. This year, NeighborWorks organizations experienced huge increases in demands for services – services they don't normally provide, like food and rental assistance, as layoffs left families stretched. At the same time, NeighborWorks' 240 network organizations saw an increase in unexpected expenses for cleaning, personal protective equipment and more. "Our organizations report that from mid-March to the end of September, they've experienced more than $30 million in unexpected costs," Rodriguez said.
Meanwhile, counseling organizations are reporting a number of homeowners who are delinquent or about to become delinquent on their mortgages. "But what perhaps is more troubling is that half of those reaching out for counseling aren't aware of the mortgage forbearance or other [relief] programs that are available." Rodriguez said there are 400,000 delinquent loans in the U.S. that could be eligible for forbearance. People don't know what options are out there, Rodriguez said, which is reminiscent of the 2008 housing crisis.
Atlanta Mayor Keisha Lance Bottoms said affordable housing in Atlanta is still a challenge. "It's absolutely astonishing that this is still a challenge for us," she said. They've made strives, negotiating development deals, setting aside funding and being creative. But we don't know what lingering impact COVID will have on the city's budget, she said. "It's a work in progress. Workforce housing, affordable housing is still a challenge in our city.
"The vast majority of the workforce can't live in city of Atlanta," she said, adding that comprehensive planning – for housing, for schools and transportation – for young people to successfully live in the city. "There's not enough time in the day to address all of the challenges that are making homeownership difficult in our city." She added that Black families weren't seeing significant increases in home values, compared to the white community.
"With all that we're doing, it's not enough," Bottoms said. "There's still so much more to be done."
Rodriguez spoke of lessons learned from the housing crisis in 2008 that could be used now to help prevent a new crisis:
- Leadership alignment across all sectors; that needs to happen again.
- Federal resources were deployed quickly via multiple channels.
- There was serious attention given to building public awareness about mortgage rescue scams, something that should happen now as scams appear related to the pandemic.
The gap exposed in the Harvard study was also exposed in the
NeighborWorks Housing and Financial Capability Survey.
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recording of the panel is available on the Joint Center for Housing Studies website.