Housing allowance advocates for first-time homebuyers seeking to close a so-called “wealth gap” between black and white families are warning that a provision to provide funding is in danger of being eliminated from President Joe Biden’s massive $3.5 trillion “Build Back Better” bill.
House Financial Services Committee Chair Maxine Waters (D-Calif.) has been attempting to convince colleagues to keep the proposal in the bill. The measure would provide $10 billion in funding and task the Housing and Urban Development (HUD) secretary with doling out money to advance the objective of improving homeownership for persons of color, The Hill reported Friday.
However, Democratic leaders are increasingly coming to the realization that in order to get the party’s moderates to sign off on the bill it will have to be less expensive, meaning programs included in the original measure will have to be trimmed or cut altogether.
And one of them under consideration for elimination is the housing allowance, according to the outlet.
“That funding is seen as a key step toward helping first-generation homebuyers access thousands in down payment assistance, a move advocates and experts say could be groundbreaking in advancing equity in housing for black people and people of color,” The Hill reported, adding: “The gap between black and white homeownership is now bigger than it was in 1968, when lawmakers first passed the Fair Housing Act to end racial housing discrimination.”
According to 2020 data from Redfin, a real estate website, found that black family homeownership was less than 45 percent across the nation compared to 73 percent for white families. At the same time, MIT released a report showing that black Americans tend to pay more than whites to own a home, which ostensibly makes it harder for black households “to accumulate housing wealth at the same rate as their white counterparts,” The Hill reported.
But the context for these disparate statistics such as average credit histories and ratings wasn’t clear, nor were the details of the measure backed by Waters, such as the specific conditions under which Americans would or would not qualify for housing assistance.
Nevertheless, Janneke Ratcliffe, the associate vice president for the Urban Institute’s Housing Finance Policy Center, told The Hill she believes “the lasting effects of slavery and racist practices like redlining have contributed to the growing racial homeownership gap,” the outlet reported.
As such, she says, there continue to exist racial disparities in various degrees of wealth accumulation such as homeownership, which is one of the principal drivers of wealth creation for many Americans.
“By barring access to homeownership to one generation of people, and allowing another generation to start homeownership, and then wealth builds and compounded for those families who did have access to homeownership and did not do so for families that didn’t,” she told The Hill.
“As the result over the long haul, you’ve sort of built-in this wealth advantage for white households, who then had more assets that they can use to pay for college and help their kids buy their first home and invest in businesses and so on,” she added.
To the issue of credit histories, Ratcliffe said research by her organization found that disadvantages to homeownership include lower credit scores for non-white households.
The housing allowance proposal is part of a much larger $300 billion spending package approved by Waters’ committee “for investments in affordable housing that has been lauded by lawmakers as historic,” The Hill reported. In addition to providing downpayment assistance, the money would also be used to rehabilitate millions of housing units.
But it is all in danger of being eliminated, the California Democrat said.
“All of this funding is now at risk of being cut from budget reconciliation entirely,” Waters said of the housing aid at a news conference earlier this week, where she was also joined by Reps. Emanuel Cleaver (D-Mo.), Sheila Jackson Lee (D-Texas), Nydia Velazquez (D-N.Y.), Nikema Williams (D-Ga.), and others.
“This is our chance. This is a once-in-a-generation opportunity to finally invest in our housing programs, our communities, and our future and investment that is long overdue,” she added.
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