NAR economist Lawrence Yun has a five-point plan for increasing homeownership among African-Americans
Global protests in response to the death of George Floyd have focused the nation’s attention on systemic racism and how to combat racial inequality.
One of the more persistent areas of inequality has been in homeownership, with the black homeownership rate no higher now than it was in 1968, before the passage of the Fair Housing Act. Lawrence Yun, chief economist for the National Association of Realtors, put forward a five-point plan on Wednesday that he said would help close the gap in homeownership rates between whites and African-Americans.
First and foremost, Yun said, supply needs to increase. That means building more homes.
“The lack of housing supply makes converting from renting to owning very difficult,” Yun said. “The lack of viable purchase options and resulting competition rapidly push up home prices, precluding some potential first-time buyers from entering the market.”
Yun also advocated building more homes in Opportunity Zones. “NAR strongly supports Opportunity Zones as a means by which to invest in the revitalization of economically distressed areas,” he said.
There must also be increased access to down-payment assistance, he said.
“Saving for a down payment can be the biggest hurdle for renters wanting to become home owners,” Yun said. “In recent years, a number of first-time buyers received help from family members with their down payments. However, due to historical gaps in accessing and accumulating wealth, it’s much more difficult for African-Americans to obtain substantial financial assistance from family members. Therefore, increased access to federal down-payment assistance based on a certain income threshold is vital, particularly for African-Americans.”
Yun’s fourth recommendation is to strengthen the Federal Housing Administration’s loan program. Yun said that FHA loans have been a vital source of financing for first-time buyers and minority households.
“Shifting federal dollars to strengthen the FHA program could lower mortgage insurance premiums and monthly mortgage payments,” he said.
Finally, Yun called for the expansion of alternative credit-scoring models.
“Expanding credit-scoring models to include rent and utilities payments – and thereby adding more positive payment histories to better demonstrate financial responsibility – can help increase homeownership opportunities for minority and first-time buyers,” he said.
