More education, removing barriers, enabling low-income buyers seen as vital to improving rate of homeownership among African-Americans
Tue, October 3, 2017, the Associated Real Property Brokers, also known as ARPB, hosted the 2nd Annual Real Estate Realtist Summit at the Hilton Garden Inn in Emeryville.
The speakers were phenomenal as they addressed the state of homeownership and disparities in the California housing market.
Carol Galante is the I. Donald Terner Distinguished Professor in Affordable Housing and Urban Policy and the Faculty Director of the Terner Center for Housing Innovation at UC Berkeley. According professor Galante, California needs new mortgage products and affordable housing units. “Today’s housing issues exacerbate a continuously uneven housing recovery,” said Ms. Galante. Contributing to the lack of progress in building more units is the cost of production, which, according to Ms. Galante, has gone up by double-digits every year.
Making it more affordable to build in California
Ms. Galante named some strategic solutions at the state level that would make building housing more affordable. Revisiting building codes, streamlining the project approval process, innovating production, and creating new financing products were listed. She said more sources for funding infrastructure and public services would also be important, since Governor Jerry Brown did away with the pool for funding infrastructure in urban communities. Ms. Galante also said removing barriers for selling multiple units would be helpful.
Some of strategies at the federal level mentioned by Ms. Galante that could address the housing crisis include: modernizing the US Federal Housing Administration (FHA), organizing for greater responsiveness to changes in the market, removing barriers to affordable development, and, making first-time home buyer credits permanent.
Helping low-income people buy real estate
Gayle Bryce, Vice President and Business Development Officer at Citi, was formerly Senior Housing Professional at Freddie Mac. Ms. Bryce shared information on the programs available to assist low-income people buy real estate. One of the underlying issues in the Black community is lack of education on what options are available in the home buying process. “What is believed versus facts – most don’t know or understand what they are getting into,” said Ms. Bryce. She went on to discuss various loan products like the Home Ready Mortgage Program, and various down payment assistance programs that exist.
According to Ms. Bryce, the Home Ready program has low, affordable down payment options, with maximum debt-to-income ratios of 40 to 49 percent. While these programs have various stipulations, the point is most low-to-moderate income buyers don’t even know they exist, and, instead chose to rent rather than purchase a home.
Other loan programs can be researched at https://downpaymentresource.com/.
Mark E. Alston, owner of Skyway Realty and Alston & Associates Mortgage Company, is also Chair of the National Association of Real Estate Brokers Political Action Committee. He said, of the estimated 39,849,872 people living in California, there are around 993, 535 who hold mortgages. Fifty percent are held by Whites, 18 percent by Hispanics, 14 percent by Asians and only 3 percent by African Americans!
One other statistic stood out: Some 56 percent of California residents are considering moving to a state with more affordable housing.
Mr. Alston said the conversation needs to be about empowerment through promoting partnerships and education, finding solutions to fixing the existing system, and changing the narrative and the mindset about homeownership.
Homeownership: the best wealth-building process
Many potential buyers have given up hope that they can ever buy a home in California. These people settle for upgrading their location by renting, and spend discretionary dollars on lifestyle luxuries and depreciating assets, such as cars.
The best wealth-building tool lies in owning a home and other real estate investments.
Though the economy ebbs and flows, those who purchase real estate should avoid getting over-leveraged. Real estate owners who can retain their property investments are building wealth at a more rapid pace than typical investments like retirement funds. A majority of the average real estate owner’s net worth is in the equity of real estate-related investments.
The system is not geared towards the underserved and poor, and policy changes — or enforcing existing policies — needs to be the focus. The trends are especially pushing Black people and other low-income groups to rent rather than to own. This is not OK!
Anyone unsure about whether they can buy should do some research, ask questions and explore all the options based on their current situation. Taking part in the American Dream of homeownership, wealth building and leaving an inheritance is possible!