Building more housing a key to increasing minority homeownership
(This article reprinted from nar.realtor.)
Lawrence Yun, Chief Economist at National Association of REALTORS®, recently provided a commentary on “how to close the persistent gap in homeownership rates.”
The interest in homebuying is strong as reflected in the surge in mortgage applications to buy a home. However, there is not enough supply to meet demand.
Though housing starts in May recovered slightly from the prior month, this marks two consecutive months of depressed levels – down by more than 20% from one year ago – due to the disruption from the economic lockdown. Significant growth in new home construction, however, is required in the upcoming months and possibly even stretching into the next three years.
Before the pandemic, America faced a housing shortage of around 5 to 6 million homes due to multiple years of underproduction of new homes. Now, in the middle of 2020, the housing shortage has intensified. Consequently, home prices will be pushed higher thereby making ownership opportunities for first-time buyers more difficult. More homes need to be built.
NAR’s Five-Point Plan:
Build more homes to increase supply:
The lack of housing supply makes converting from renting to owning very difficult. The lack of viable purchase options and resulting competition rapidly push up home prices, precluding some potential first-time buyers from entering the market.
Build more homes in Opportunity Zones:
NAR strongly supports Opportunity Zones as a means by which to invest in the revitalization of economically-distressed areas.
Increase access to down payment assistance:
Saving for a down payment can be the biggest hurdle for renters wanting to become homeowners. In recent years, a growing 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.
Strengthen FHA’s loan program:
FHA loans have been an important 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.
Expand 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.
“Opening Doors to Housing” is a campaign by Seattle King County REALTORS® to make housing and opportunity tools available to our members as they serve the diverse communities in our area. For the next few weeks, our series on “Opening Doors to Housing” will be sharing resources, articles, best practices, talking points, and stories on advancing housing opportunities and promoting inclusiveness.
As a charter member of the National Association of REALTORS®, Seattle King County REALTORS® is proud to stand with our national organization as it launches a broader effort to promote awareness and progress on fair housing and equal opportunity for all.
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