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The lack of affordable housing and access to homeownership remains a key barrier to racial equity. People of color are at the highest risk for eviction, and the impacts of COVID-19 are widening housing instability for these individuals.[1] Additionally, lower income communities of color are less likely to have access to resources (quality local schools, grocery stores, transportation, employment, parks) or a safe environment (e.g., higher proximity to toxic waste, increased pollution and crime). This limits wellbeing, upward mobility and economic opportunity. Homeownership rates at 25 percent lower for Black and Latino families, and as rents continue to rise, Black and Latino households are more likely to be cost burden than White households. Affordable housing and homeownership are the cornerstone to promoting inclusive, equitable neighborhoods.

Business Roundtable members are setting a Roundtable-wide goal of producing and preserving 200,000 affordable units by 2025, including in mixed income communities, at a cost of $30 billion in funding.

Business Roundtable is encouraging all mortgage lenders to responsibly increase the number of new, sustainable Black and Latino homeowners by providing 120,000 purchase loans totaling $25 billion in mortgage purchase originations to Black and Latino customers by 2025 and enhancing efforts to deliver refinance loans to Black and Latino customers.

$30 billion Business Roundtable goal to produce and preserve 200,000 affordable units

While the business community has a role to play in addressing the disparities in affordable housing, the federal government must lead. The federal government is a primary source of funding for housing in the form of mortgage and multifamily finance and subsidy assistance, and it is the primary regulator and enforcer of fair housing and anti-discrimination laws. And while most of the key challenges in housing are local, the federal government has the power, scale and resources to address some of the most significant racial inequities in housing.

To support production and preservation of affordable rental units, including in mixed-income neighborhoods accessible to Black and Latino households, a doubling of federal funding is needed from $14 billion to $28 billion for existing effective affordable housing programs. These programs include the Low-Income Housing Tax Credit, Housing Trust Fund, Emergency Solutions Grants, Community Development Block Grants and HOME for FY21-26 and should add additional incentives in transportation and infrastructure funding for land use and local zoning reform.

Far fewer Black (43 percent) and Latino (47 percent) households own their homes compared to White (73 percent) households, and Black and Latino households originate a lower share of mortgages than White households. To help address this, the Department of Housing and Urban Development (HUD) should reform onerous origination and servicing requirements for Federal Housing Administration loans. Regulators should open up the securitization markets for safe loans. These changes are estimated to increase economic growth by 0.2 percent, reduce cost of mortgages by 20-30 bps and generate $500 billion of additional mortgages. In addition, Business Roundtable also endorses the government-sponsored enterprises maintaining affordability commitments and the establishment of a federally backed down payment assistance program.

43% of Black households own their homes when compared to 73% of White households

47% of Latino households own their homes when compared to 73% of White households

Black (56 percent) and Latino (54 percent) households are more likely to be cost-burdened than White renters (45 percent) and disproportionately impacted by housing insecurity exacerbated by COVID-19. To address this, federal funding is needed for rental assistance, vouchers and counseling for eviction/foreclosure. In addition, Business Roundtable supports counseling to assist with property transfer, trusts and wills to support intergenerational wealth transfer.

Homes in majority Black communities are undervalued by an average of 23 percent (approximately $48,000 per home on average) than homes in communities with few or no Black residents, even after controlling for differences in home and neighborhood qualities such as amenities, school performance, and crime levels. Business Roundtable supports efforts to explore new ways to close the property value gap, including enhanced diversity training, expansion of the labor pool to reflect the communities they serve and the implementation of new valuations methods that reduce bias.

To prioritize and ensure equal opportunity and access to affordable housing without any barriers, federal housing policies should advance fair housing and address discrimination by reinforcing the importance of disparate impact under the Fair Housing Act, reinstating Affirmatively Furthering Fair Housing, and, banning source of income discrimination affecting renters.

Sources:

[1] McCargo, Alanna and Greene, Solomon, new-data-suggest-covid-19-widening-housing-disparities-race-and-income, Blog post May 29, 2020