by Dr. Anthony O. Kellum
Today, Black homeownership hovers around 45 percent, significantly lower than the national average. A 1 percent increase in Black homeownership may seem like a small change, but its ripple effects can be transformative. Homeownership is one of the most effective ways to build wealth, creating financial security and generational stability. For Black families, even a slight rise in homeownership means more opportunities to accumulate equity, access better education, and strengthen community ties. Beyond individual households, it contributes to narrowing the racial wealth gap, boosting local economies, and fostering long-term economic mobility. In short, that 1 percent represents progress toward a more equitable and prosperous future. Let’s explore.
- Wealth Generation: A 1 percent increase would mean roughly 170,000 more Black families owning homes. Owning a home is one of the most effective ways to build wealth in America. It offers a path to equity appreciation, which provides homeowners with long-term financial security. Those 170,000 additional homeowners would have the potential to build hundreds of millions of dollars in wealth over time, simply by having access to property ownership.
- Economic Impact: Homeownership doesn’t just benefit individuals; it drives local economies. When families own homes, they invest in their communities through property taxes, home improvements, and local businesses. An increase in Black homeownership would stimulate economic activity in underserved neighborhoods, creating jobs, strengthening schools, and enhancing local services. The ripple effect would extend beyond Black communities, benefiting the overall economy.
- Legacy Building: Perhaps the most critical point is the potential for legacy building. For too long, Black families have been locked out of the intergenerational wealth transfer that homeownership provides. A home can be passed down, ensuring that future generations have a foundation on which to build their own lives and dreams. The ability to pass down equity, security, and stability can change the course of a family’s future for generations to come. The impact would be profound, long lasting, and a powerful testament to the undeniable truth that Property is Power.
Implementing a 1 percent Increase:
Achieving a 1 percent increase from 45 percent to 46 percent over two years may seem modest, but the pathway to this goal requires a multifaceted approach. Systemic barriers to homeownership have been deeply entrenched for decades and dismantling them will involve a combination of public policy reforms, private sector initiatives, financial education, and community driven efforts.
- Policy Reforms: Unlocking Access
At the heart of increasing homeownership is ensuring equitable access to the housing market. This can be done through targeted policy changes aimed at breaking down barriers for Black prospective homebuyers.
- Strengthen Fair Housing Laws: Strengthen the enforcement of fair housing laws to prevent discrimination in lending, real estate transactions, and rental agreements. Ensure that federal, state, and local housing authorities strictly regulate and monitor housing practices to prevent redlining and other forms of discrimination.
- Expand Down Payment Assistance Programs: Many Black families face barriers due to the lack of upfront cash for down payments. Expanding federal and state funded down payment assistance programs specifically aimed at low and moderate-income families can alleviate this obstacle.
- Increase Affordable Housing Stock: Incentivize developers to build more affordable homes in areas with historically low homeownership rates through tax breaks, grants, and zoning adjustments. Increasing the supply of affordable housing will create more opportunities for homeownership within the Black community.
- Tax Incentives for First-Time Buyers: Introduce or expand tax credits for first-time Black homebuyers. These incentives should be designed to support buyers with lower incomes and those purchasing homes in historically redlined communities.
- Financial Education and Credit Building
One of the critical barriers to homeownership is access to affordable credit. Strengthening financial literacy and credit-building resources can empower potential homeowners.
- Expand Homebuyer Education Programs: Launch educational programs that focus on home buying basics, the mortgage process, and how to build and maintain good credit. Partner with local community organizations, schools, and financial institutions to deliver these programs in underserved areas.
- Credit Repair Assistance: Many Black prospective homeowners face challenges due to poor or nonexistent credit histories. Local governments, nonprofits, and financial institutions should offer credit repair services that provide counseling and tools to improve credit scores.
- Partnerships with Credit Unions and CDFIs: Community Development Financial Institutions (CDFIs) and credit unions often have more flexibility to offer loans to people with lower credit scores. Expanding partnerships with these institutions can create more opportunities for Black families to secure mortgages at favorable terms.
- Public-Private Partnerships:
The private sector, including banks, mortgage lenders, and real estate companies, has a critical role to play in closing the Black homeownership gap.
- Inclusive Lending Programs: Mortgage lenders should design loan programs that are accessible to borrowers who have traditionally been excluded due to lower credit scores, income, or lack of wealth. These programs could include flexible underwriting standards, lower down payment requirements, and reduced private mortgage insurance (PMI) costs.
- Employer-Assisted Housing Programs: Employers can help increase homeownership by offering down payment assistance or low interest home loans to employees. This is especially impactful when large corporations partner with local governments and community organizations to target Black workers.
- Real Estate Developer Incentives: Developers should be incentivized to invest in Black communities through grants and loans that support the construction of affordable housing and mixed income developments. In exchange, developers can commit to reserving a percentage of new homes for first-time Black homeowners.
- Community Centered Approaches
Local communities are the key drivers of sustainable change. Increasing Black homeownership requires empowering individuals, families, and neighborhoods with the tools and opportunities to succeed.
- Community Land Trusts (CLTs): CLTs are nonprofit organizations that acquire and hold land for the purpose of providing affordable housing. Homeowners own the house, but the trust retains ownership of the land, keeping housing costs low. Expanding CLTs in Black communities could create lasting affordability and homeownership opportunities.
- Local Housing Counseling Services: Housing counseling agencies can offer one-on-one support to potential Black homebuyers, walking them through the complexities of the mortgage process. Expanding access to these services would provide critical support for those facing financial or bureaucratic challenges in their home-buying journey.
- Support for Legacy Homeownership: Efforts should be made to preserve homeownership within families. Many Black families lose generational wealth due to legal complications, tax foreclosures, or the inability to maintain inherited properties. Implementing programs that provide legal assistance and financial support to families to maintain or transfer ownership could prevent property loss and build intergenerational wealth.
- Measuring and Sustaining Success
To ensure that the 1 percent increase in Black homeownership is achieved and that its impacts are long-lasting we must measure progress and ensure sustainability through ongoing efforts.
- Track Homeownership Growth: Government agencies, such as HUD, and housing-focused nonprofits should track and report on Black homeownership rates regularly, evaluating the effectiveness of implemented programs. Transparent data collection and analysis will help policymakers adjust strategies as needed.
- Support Ongoing Financial Stability: Homeownership is just the beginning. To sustain homeownership and prevent foreclosure, offer post purchase financial counseling. Programs should provide education on budgeting, home maintenance, and building long-term equity.
- Community Reinvestment Act (CRA) Accountability: Hold banks accountable for community reinvestment through the CRA, ensuring that they lend fairly and equitably in underserved areas. Regular evaluations of banks’ lending practices in Black communities will help maintain the momentum toward increased homeownership.
Conclusion:
By increasing Black homeownership by just 1 percent, from 45 percent to 46 percent, we create a ripple effect of wealth creation, economic empowerment, and legacy building. While the journey will require the collaboration of government, private industry, and community leaders, the long-term impact will be monumental. It is a critical step toward closing the racial wealth gap in. The racial wealth gap is driven in large part by disparities in homeownership rates and property values between Black and White households. Each percentage increase in Black homeownership brings future generations closer to financial parity with their White counterparts.
(Dr. Anthony O. Kellum—CEO of Kellum Mortgage, LLC , O: 313-263-6388 W: www.KelluMortgage.com.)
(Property is Power! is a movement to promote home and community ownership. Studies indicate, homeownership leads to higher graduation rates, family wealth, and community involvement.)