TO: Arthur Acolin

FROM: Dylan Bergan, Amar Halaweh, Amelia Kazunas, Maricella Ragudos

INTRODUCTION:
A large gap in the homeownership rates of white and nonwhite homeowners exists in the
United States. Despite some increases in the homeownership rates of nonwhite buyers, the rates
of homeownership particularly among Black and non-white Hispanic households remains
disproportionately lower than white homeownership rates and this gap has even increased in
recent years, as shown in Figure 1. Homeownership is a key economic and social asset for
Americans, so this lack of homeownership among people of color also leads to a deficit in
housing wealth. Overall this negatively affects economic stability, access to federal funding,
policy benefits, and quality of life within communities of color.
CONTEXT:
When considering historical contexts, the United States’s homeownership gap can be
understood as the result of numerous racial segregation acts and policies. One of the earliest acts
was the Supreme Court ruling Corrigan v. Buckley, dismissing “any constitutional grounds for
challenging racially restrictive covenants and upheld the legal right of property owners to
enforce these discriminatory agreements” (Corrigan v. Buckley, 271 U.S. 323 (1926)). Protected
by law, entire neighborhoods across the country could prohibit the sale, occupation, or lease of
property to a particular race—most often Black people. In the following years, New Deal
programs including the Home Owners’ Loan Corporation (HOLC) in 1933 and the GI Bill in
1944 set the stage for further housing inequality. While the HOLC created the practice of
redlining, the G.I. Bill excluded Black veterans in its disbursement of housing funds.
Additionally, The Housing Act of 1949 and the National Interstate and Defense Highways Act of
1956 both contributed to racial housing discrimination and the segregation of American cities.
The Housing Act sought to address the decline of American urban housing, but in dictating how
cities would be revitalized, it facilitated the displacement of thousands of primarily Black
residents. Further, the Highways Act utilized eminent domain to cut through and destroy entire
neighborhoods primarily occupied by Black, Indigenous, and immigrant communities to
construct America’s highways. While the introduction of the Fair Housing Act of 1968
“prohibited discrimination concerning the sale, rental, and financing of housing based on race,
religion, national origin, sex, handicap, and family status,” there are still great strides to be made
in ensuring housing equity.
Specific to Seattle’s history, the Open Housing Campaign (1959-68) played a significant
role in the city’s push for housing equity. Through Proposition 1 (Open Housing Ordinance,
1964) and Ordinance 96619 (Open Housing 1968), Seattle prohibited unfair housing practices in
the sale and rental of homes throughout the city. These policies are important but insufficient,
and Seattle remains a highly racially segregated city.
TASK:
While the current state of affairs is still quite dismal, lawmakers have introduced several
pieces of legislation to bridge the gaps. In the state of Washington, the House of Representatives
has recently passed House Bill 1474 (HB1474) and it is awaiting trial in the state Senate
(SB5496). HB1474 would create a “covenant homeownership account” (HB1474, 2023). Under
this legislation, the state government will collect a $100 “document recording assessment” on
each real estate transaction in the state and use the money to fund down payment and closing
cost assistance, and counseling before and after the home purchase for eligible homebuyers. To
be eligible for this assistance, a potential homebuyer must have either been a Washington
resident before the Fair Housing took effect or was excluded from homeownership by a racially
restrictive covenant on or before April 1968, or be a descendant of a resident meeting the
aforementioned criteria. They must also be a current Washington resident earning a household
income at or below the area’s median income (AMI). The assistance will be in the form of a loan
due when the home is sold.
Additionally, residents in the city of Seattle voted to pass Initiative 135 (I-135), which
will create social housing (I135 2023). Under I-135, the city will operate through a public
developer to create housing units that will be rented at a maximum of 30% of the household’s
income for households earning 0-120% of the AMI. The Initiative states that the public
developer “should explore tenant unit ownership options as modeled by international social
housing models,” though ownership is not guaranteed. However, as BIPOC households are more
likely to be renters and more likely to be cost-burdened or severely cost-burdened, this program
would allow households the opportunity to save money and become more economically secure.
On a national level, several private entities have launched programs aimed at mitigating
the racial disparities in homeownership. The National Association of Real Estate Brokers
launched a program in 2018 entitled “Two Million New Black Homeowners” that aimed to bring
the Black homeownership rate up to 49% in five years (Davis 2020). They’re working toward
this goal mainly through policy advocacy at local, state, and federal levels; education on the
importance of homeownership in wealth-building through community outreach; and funding
neighborhood and community development projects (National Association of Real Estate
Brokers 2019). Chase Bank has also recently introduced a $5,000 homebuyer grant program to
help pay down payment and closing costs for homebuyers in predominantly Black, Hispanic, or
Latino Census tracts (Chase Media Center 2022). They’ve also launched a homebuyer education
program nationally that partners with local nonprofit organizations to help people become
financially ready to buy a home through counseling on budgeting, credit building, and financial
health assessments.
DISCUSSIONS AND RECOMMENDATIONS:
We have mentioned the current policies in place that are making an effort to mediate the
racial homeownership gap. However, there are still more recommendations for further policy
changes to make homeownership more accessible and sustainable long-term for persons of color.
Given the disproportionate homeless and cost burden rates on the BIPOC community in
Washington, the Washington State Legislature recognized the need to create the Homeownership
Disparities Work Group. This group is responsible for identifying recommendations that can
guide the policy and program changes needed to reduce the disparities in homeownership people
of color experience. The Legislature provides 12 ready and actionable recommendations(WA
Dept of Commerce):
1. Increase biennial state funding for affordable homeownership programs, including land
acquisition and predevelopment costs.
2. Fund a technical assistance/capacity-building program to build the nonprofit
organizational infrastructure to develop, finance, facilitate, build, and steward all types of
affordable homeownership projects.
3. Provide technical planning assistance and resources to municipal governments to increase
affordable homeownership units.
4. Revise Housing Trust Fund and Housing Finance Commission programs to reduce the
administrative burdens on applicants.
5. Increase the amount of funding available for direct assistance to homebuyers and
homeowners.
6. Make current programs more flexible by increasing the per-household limits on existing
assistance awards.
7. Target homeownership assistance to the BIPOC community via historical ties to
culturally specific areas.
8. Provide incentives to home sellers to accept offers from purchasers using down payment
assistance programs.
9. Expand debt mediation and credit repair programs.
10. Ensure that awareness of homeownership programs is part of licensing and education
requirements for people in the real estate industry.
11. Fund culturally specific organizations for outreach to increase the visibility of and access
to homeownership assistance programs for BIPOC communities.
12. Explore policies to improve connections with BIPOC communities to ensure that interest
in homeownership is understood by funders.
Granted, many of the policies and recommendations above would result in a trade-off of
prioritizing funding homeownership initiatives rather than rental initiatives. While rental
initiatives are important in providing housing for low-income communities that often
disproportionately consist of BIPOC populations, there are benefits to homeownership in the
United States that place BIPOC households at a disadvantage.
Homeownership is considered to be the primary way to build wealth and equity in the
United States. Given the gap in homeownership between white and BIPOC households, a greater
rate of financial and housing insecurity is seen in BIPOC households. As seen in figure 2,
homeowners received more than 70% of federal housing subsidies in 2015. Federal housing
expenditures are more heavily targeted toward homeowners, even though 36% of U.S.
households are renters and 60% spend more than 50% of their income on housing (Center on
Budget and Policy Priorities). BIPOC households are unable to receive the benefits of
homeownership, which ultimately leads to the long-lasting effects of decreased generational
wealth, leaving children of BIPOC households less likely to own a home.
CLOSING:
By understanding the severity of the homeownership gap between white and nonwhite
buyers and the many factors that have widened this gap over time, policymakers can make
informed decisions that can support the growth of long-term housing wealth among communities
of color. While renters are a politically underrepresented community composed of a
disproportionately high number low-income and nonwhite individuals, improving the
homeownership rates among persons of color is vital for building economic stability, political
influence, and generational wealth. For communities excluded from these benefits,
homeownership and housing wealth have the potential to greatly improve housing equity and
social equity more broadly.
Figures

Figure 1: Homeownership Rate by Race, https://www.urban.org/

Figure 2: Most Federal Housing Expenditures Benefit Homeowners

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC9342590/#:~:text=Redlining%20thereby%20contribute
d%20to%20segregation,health%20and%20health%2Drelated%20outcomes.
https://www.urban.org/policy-centers/housing-finance-policy-center/projects/reducing-racial-homeown
ership-gap
https://www.urban.org/urban-wire/three-differences-between-black-and-white-homeownership-add-ho
using-wealth-gap
https://home.treasury.gov/news/featured-stories/racial-differences-in-economic-security-housing
https://depts.washington.edu/civilr/segregation_maps.htm
http://commerce.wa.gov/wp-content/uploads/2022/09/Homeownership-Disparities-Recommendations-
Report-FINAL-Sep2022.pdf
https://www.seattle.gov/cityarchives/exhibits-and-education/online-exhibits/seattle-open-housing-cam
paign
https://www.npr.org/2017/05/03/526655831/a-forgotten-history-of-how-the-u-s-government-segregate
d-america
https://www.cbpp.org/most-federal-housing-expenditures-benefit-homeowners
https://www.cbpp.org/
https://media.chase.com/news/chase-expands-homebuyer-grant-to-help-more-hispanic-and-latino-famil
ies
https://www.nareb.com/2mn5/
https://www.comstocksmag.com/web-only/two-million-five-years
https://www.houseourneighbors.org/initiative-overview-and-text