Historically, one of the best ways to build wealth in America is through homeownership. Beginning in 1917, the federal government used its influence to encourage white Americans to “Own Your Own Home”.¹ In 1933, the federal government went further by assisting white families who needed to be rescued from default by creating the Home Owners’ Loan Corporation (HOLC).² In 1934, the federal government created the Federal Housing Administration (FHA) to provide mortgage insurance to white, middle-class renters.³ For decades, these programs and many others were exclusive to white Americans and allowed them to build wealth in ways that Black Americans were not permitted. Instead, Black Americans were subjugated to substandard housing, predatory contract deeds, racial zoning ordinances, redlining, violence, and subprime lending practices. The impact of these accrued disadvantages is reflected in today’s housing outcomes and racial (lineage) wealth gap. 

• In 2020, only 44% of Black households owned their homes compared to 74% of white households.⁴
  
  
• As of 2016, the combined net worth of 11.5 Black households equates to one typical white household’s net worth.⁵
  
  
• Black American home values do not appreciate at the same rate as white home values. The typical white families’ home value is $230,000 compared to the typical Black families’ home value of $150,000.⁶
  
  
• In 2015, the Black homeownership rate was 41.2%, nearly the same as it was in 1968 at 41.1%.⁷
  
  
• Over the past 40 years, a typical home in a previously redlined neighborhood gained $212,023 or 52% less than one in a greenlined [white] neighborhood.⁸
  
  
• Subprime loans are 5x’s more likely in Black neighborhoods as they are in white neighborhoods.⁹
  
  
• Homeowners in high-income Black neighborhoods are twice as likely as homeowners in low-income white neighborhoods to have subprime loans.¹⁰
  
  
• In 2019, 44% of Black households were cost burdened compared to 26% of white households, as they spend more than 30% of their income on housing.¹¹
  
  
• In 2019, nearly 55% of Black renters were cost burdened compared to 42.6% of white renters.¹²
  
  
• In 2020, African Americans accounted for 53% of the homeless population as members of families with children and just 12% of the total US population.¹³
  
  

The above data illustrates the housing divide between Black and white households. As this gap is the result of government policy, it is imperative that the government is intentional in creating new policies to remedy and repair Black Americans. We require the following:

• First-time, Black homebuyers must receive grants in the form of full down payment assistance and not incur private mortgage insurance fees. Having a direct relative who owns or previously owned a home should have no bearing on eligibility. Instead, the ADOS Matrix must be used to prioritize eligibility. The same package must be re-administered, adjusted, and scaled up each fiscal year until the homeownership gap between white and Black households is closed.
  
  
• Homebuyer assistance programs should be expanded to include need-based grants that will cover up to 100% of closing costs for Black Americans.
  
  
• Current Black homeowners, particularly those in previously redlined neighborhoods, must receive grants to rehabilitate existing housing, based on need.
  
  
• Credit score models must evolve to include utility bills and rental payments as variables to assess creditworthiness.
  
  
• Black families who resided in previously redlined neighborhoods must be made whole. The Biden-Harris administration must create a special office and database to locate and track the families who were redlined between the 1930s and 1960s and offer recompense. This must be done via full down payment assistance or direct payments. Today, the largest redlined neighborhoods are mostly non-Black.¹⁴ Therefore, policy remedies cannot be exclusive to previously redlined neighborhoods, instead policies must prioritize those who were directly impacted or their descendants.
  
  
• The Biden-Harris administration must audit the banks who were responsible for the housing market crash of 2008. Black households that were targeted into subprime loans must be made whole financially. A full accounting of borrowers who qualified for prime loans but were steered toward subprime loans is essential.
  
  
• The Biden-Harris administration must invest an initial $750 billion to build, renovate and rehabilitate housing to increase the affordable housing stock. The affordable housing stock must be in healthy, resource-rich communities. We do not support the development of more public housing projects in dense, resource-poor communities. As COVID-19 has changed the corporate landscape there are a number of office buildings that will no longer be used solely, if at all, for business. The federal government must investigate these sites to potentially repurpose as affordable housing options.
  
  
• The Biden-Harris administration must increase the number of Housing Choice Vouchers to eliminate the number of Black renters who are cost burdened. This increase can be done, in part, by converting the Housing Choice Voucher program into a federal entitlement. Guaranteeing every qualifying household, a voucher. In addition, the Department of Housing and Urban Development must increase the efficiency, funding, and access of homeownership programs to help more voucher holders become owners.
  
  

References

1.  Richard Rothstein, The Color of Law: A Forgotten History of How Our Government Segregated America (New York; London: Liveright Publishing Corporation) 2017, 60.
   
   
2.  Rothstein, 63
   
   
3. Rothstein, 64
   
   
4. Heather Long and Andrew Van Dam, “The black-white economic divide is as wide as it was in 1968,” The Washington Post, June 4, 2020. https://www.washingtonpost.com/business/2020/06/04/economic-divide-black-households/.
   
   
5.  Ibid
   
   
6. Bhutta, Neil, Andrew C. Chang, Lisa J. Dettling, and Joanne W. Hsu, “Disparities in Wealth by Race and Ethnicity in the 2019 Survey of Consumer Finances,” FEDS Notes. Washington: Board of Governors of the Federal Reserve System, September 28, 2020. https://doi.org/10.17016/2380-7172.2797.
   
   
7.  Janelle Jones, John Schmitt, and Valerie Wilson, “50 years after the Kerner Commission: African Americans are better off in many ways but are still disadvantaged by racial inequality,” Economic Policy Institute, February 26, 2018. https://www.epi.org/publication/50-years-after-the-kerner-commission/.
   
   
8.  Dana Anderson, “Home Equity, Low Homeownership Rates For Black Families,” Redfin News, October 15, 2020. https://www.redfin.com/news/redlining-real-estate-racial-wealth-gap/.
   
   
9.  U.S. Department of Housing and Urban Development, Office of Policy Research & Development, Unequal Burden: Income & Racial Disparities in Subprime Lending in America (2000), 2. https://www.huduser.gov/Publications/pdf/unequal_full.pdf.
   
   
10.  Ibid, 2.
    
    
11.  National Low Income Housing Coalition, Out of Reach: The High Cost of Housing (2020), 8. https://reports.nlihc.org/sites/default/files/oor/OOR_2020.pdf.
    
    
12. wp-signup.phpt Center for Housing Studies of Harvard University. The State of the Nation’s Housing 2019. Accessed May 29,2020. https://www.jchs.harvard.edu/sites/default/files/reports/files/Harvard_JCHS_State_of_the_Nations_Housing_2019%20%281%29.pdf
    
    
13.  U.S. Department of Housing and Urban Development, Office of Community Planning and Development, The 2020 Annual Homeless Assessment Report (AHAR) to Congress (2020), 32. https://www.jchs.harvard.edu/sites/default/files/reports/files/Harvard_JCHS_State_of_the_Nations_Housing_2019%20%281%29.pdf
    
    
14.  Andre Perry and David Harshbarger, “America’s formerly redlined neighborhoods have changed, and so must solutions to rectify them,” Brookings, October 14, 2019. https://www.brookings.edu/research/americas-formerly-redlines-areas-changed-so-must-solutions/.