Post-COVID equity must include closing racial gaps in housing
As America begins its slow but steady recovery from the COVID-19 pandemic, it is time to face up to another critical challenge: healing the racial divisions that have been laid bare over the past year. A dedicated focus on reducing the racial disparities that exist in housing, an area of immense importance to the strength and vitality of families and communities, can make a significant contribution to this healing process.
Stable housing, whether in a home that is owned or rented, matters a lot. Research demonstrates that stable, affordable housing offers significant health benefits for families. It also leads to better academic achievement for children, a result that can reverberate over a lifetime in the form of higher incomes and greater financial security. A home located in a decent neighborhood near employment and other opportunities can serve as an entree to economic success, not just for the adults in the household but for their children too.
Unfortunately, people of color are disproportionately represented among those who live in unstable housing, often in areas of concentrated poverty. According to one study, Black people are nearly six times more likely than white people to live in a high-poverty neighborhood, and Hispanic people are four times more likely. Black people are also dramatically overrepresented among those experiencing homelessness: While only 13 percent of the general population, Black people constitute 40 percent of those experiencing homelessness and more than 50 percent of homeless families with children.
Minority households are also disproportionately represented among those who pay unaffordable rents. In 2018, 22 percent of white renters were “severely burdened” by their housing costs (paying more than 50 percent of their incomes on rent), while 28 percent of Hispanic renters and 31 percent of Black renters were so burdened.
The impact of the pandemic has exacerbated these disparities. According to a UCLA study, Black and Hispanic renters in California — with their disproportionate representation in the service and retail industries, which have been hit hardest by the pandemic — were more than twice as likely as white renters to be unable to pay their bills. Other studies estimate that people of color, particularly Blacks and Hispanics, constitute approximately 80 percent of the people now facing eviction.
Homeownership is a critical tool in building household wealth that can be passed down from generation to generation. The median net worth of homeowners is more than 40 times that of renters. But when it comes to homeownership, staggering racial disparities persist: While today’s white homeownership rate is 74.5 percent, the rate for Hispanics is 49.1 percent (more than a 25-percentage point difference) and for Blacks 44.1 percent (more than a 30-percentage point difference).
While there are multiple causes for the racial disparities we see in housing, discriminatory policies have clearly played a role. In the past, this discrimination was overt and sometimes state-sanctioned.
In 1934 the newly-created Federal Housing Administration adopted a policy of refusing to insure mortgages in and around predominately-Black, “redlined” neighborhoods, while simultaneously subsidizing builders who were building white subdivisions on an industrial scale. Black people were discouraged from moving into these new, white neighborhoods out of an unjustified fear they would depress housing values there. More than 80 years later, three out of four redlined communities remain home to low-to-moderate income households, many of them minorities.
According to one recent study, Black homeowners today not only have primary mortgages with higher interest rates than white homeowners with similar incomes, they also have higher interest rates than white homeowners with substantially lower incomes. Other research shows that Black homeowners pay more in insurance premiums and higher property taxes, while often being locked out of refinance opportunities. These extra costs, over the life of a mortgage, are significant — amounting to about half the Black-white gap in liquid savings at retirement.
As America recovers and builds back from the pandemic, tackling our enormous housing challenges must take center stage. Acknowledging and addressing the deep-rooted racial dimensions of these challenges can no longer be ignored.
To assist in this effort, the Bipartisan Policy Center recently formed a Housing Advisory Council consisting of some of our nation’s leading housing experts. We are proud to co-chair this work along with two housing innovators and former mayors, San Diego’s Kevin Faulconer and Philadelphia’s Michael Nutter. We look forward to working with policymakers from across the political spectrum to advance a set of bold and enduring policies that promote housing affordability and stability while helping America heal.
Henry Cisneros is the former Secretary of the U.S. Department of Housing and Urban Development, former mayor of San Antonio, Texas, and a Board Member of the Bipartisan Policy Center. Pamela Hughes Patenaude is the former Deputy Secretary of the U.S. Department of Housing and Urban Development and a Board Member of the Bipartisan Policy Center. They serve as co-chairs of the Bipartisan Policy Center’s Housing Advisory Council.
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