In reviewing the plan put forward by Sen. Kamala Harris to combat the Racial Homeownership Gap, I find the core principles put forward in the plan laudable, which aim to redress generations of housing discrimination. The plan as summarized invests $100 billion in down payment assistance grants of up to $25,000 for individuals/families purchasing homes in historically red-lined low-to-moderate income (LMI) neighborhoods, which could at minimum assist 4 million families/individuals. The requirement of the home being a primary residence, should be coupled with a requirement that the $25,000 should be a forgivable grant that requires homeowners live a minimum of five years in the home they purchase. This in effect allows $5,000 to be forgiven annually, and any remainder balance recaptured from the proceeds of a sales transaction, should the homeowner sell the home earlier, should be reinvested back into the program.
The tenancy requirements of
the program, however, is likely to exclude a lot of what we call the 'Missing
Black Middle', younger upwardly mobile African Americans under the age of 45.
The Missing Black Middle are not likely to meet the qualification requirement
of living in the historically red-lined community over the preceding 10 years,
being that the Black community has been highly transient over the last 50
years. To this end, additional guidelines must be incorporated to account for
this Missing Black Middle of potential homeowners whom the plan would
unintentionally omit.
Take for example a 35-year
old person who attended college out of town, and graduated twelve years ago.
The likelihood of them having lived in a historically red-lined low-to-moderate
income (LMI) neighborhood consistently for the preceding 10 years is low, as
they likely had to change addresses at least twice over that period; with
quality of area, availability of housing options, and proximity to work being
key determinant factors in where they chose to live. A lot of the other
residents who meet the criteria would likely be older longstanding homeowners
who are etched in place or long-term renters for whom the likelihood of
purchasing a home is quite low.
For a plan of this magnitude
to work effectively, the tenancy requirements should be adjusted to better
target and accommodate the demographic of African Americans most likely to be
able to capitalize on the opportunity, and inure the benefits of returning to
the communities where they were reared. The criteria as proposed should add
language that provides access to the homeownership grants for African Americans
under the age of 45 who lived for five years or more in historically red-lined
LMI neighborhoods during the preceding 25 years. There should also be an
exception for under-40 college graduates whose families (within the third
degree of consanguinity) have historic ties to any neighborhood nationally
targeted by the plan. Lastly, there should be greater flexibility on the annual
income and maximum home price caps by indexing it as a percentage (125%) of the
Area Median Income and Median Home Price in certain urban areas (think:
Houston, San Francisco, Washington DC, Boston, Los Angeles and New York).
(This article should not be
taken as an endorsement of any political party or candidate)
Laolu Davies-Yemitan is a real estate broker and developer
who specializes in housing, multifamily development, and urban revitalization.
He editorializes on issues related to affordable housing, real estate markets,
and public policy. LaoluD.blogspot.com; Twitter: @laoludavies
