Rescuing black homeownership to build wealth and stabilize communities

Rescuing black homeownership to build wealth and stabilize communities
Make a home for your family and generate passive income at the same time

There's a big word that's floating around Chicago these days that excites some and scares others.  It all depends on which side of the fence you're on.  People who are against it says it's detrimental to certain communities, particularly for residents of color.  People who are for it say it's "not the great evil" it's made out to be.  No matter what, it's a word that tends to elicit strong emotions.

Gentrification.

Somewhere in the middle between the opposing sides there are certain organizations seeking to help some vulnerable residents ride the wave of a city which by many indications is on the rise.

A decade after the housing crash destroyed the American Dream for millions of homeowners, black homeownership rates have dropped to levels not seen since the 1960s, hobbling African-Americans' efforts to build their wealth.

Nationally, only 42.2 percent of blacks owned homes in 2016, compared with 71.9 percent of whites, according to a new report by Harvard University's Joint Center for Housing Studies.

And in Chicago, the gap between black and white homeownership rates is even more extreme. Only 38.9 percent of African-Americans owned homes in the Chicago area in 2015, compared with 74 percent of whites. Before the housing crash, almost half of African-Americans in the Chicago area owned homes, according to Harvard's research.

Chicago Tribune article "Why black homeownership rates lag even as the housing market recovers" 7/21/17

I recently spoke with Courtney Jones, President of the Dearborn Realtist Board (DRB) which organized an event happening tomorrow to increase the number of black families buying homes in Chicago.  "There was an implosion in black wealth when the housing bubble burst almost ten years ago," Jones said. "Established in 1941, Dearborn Realtist Board is one of the select organizations in Chicago advocating for black housing and the ability to build wealth through real estate. Our parent organization, The National Association of Real Estate Brokers, has a national initiative to put 2 million new homeowners in homes over the next 5 years. This initiative was started in 2016."

Jones suggests that there are ways that a broader range of residents can benefit from an improving city, not just people who are young and upwardly mobile.  "We look for ways to help residents of color help themselves to not get washed away in waves of re-gentrification.  We watch things like the recent Senate bills on contract selling, rent-to-own, and other public policies to represent renters and to keep them from being taken advantage of.  We advocate for the use of alternative forms of credit (like rent payments and utility bills) through FICO 9 and VantageScore in terms of qualifying for home ownership.  If a person is paying their rent consistently and on time why wouldn’t they pay a mortgage?"

DRB is hosting a "Community Wealth Building Day" this Saturday at Chicago State University.  "This event not only offers free credit reports to attendees, we also offer the opportunity for individuals to meet with a housing specialist to see if they can get a pre-approval to buy a home done that day, Jones said.  "For those whose current profiles might put them on a longer pathway to home ownership due to dings in their credit history, we also offer credit repair coaching to move people in the right direction."  This event will connect current and potential homebuyers with housing counselors, lenders, real estate brokers, real estate attorneys, general contractors, home inspectors and other housing specialists.

Not only does DRB promote ownership of single family homes, they also encourage families to consider buying properties with multiple units to live in one unit and rent out the others.  “It’s a big deal for us," Jones said.  "We focus on teaching the principles of building wealth through owning property.  One way is through the multifamily rental property approach.  We educate people about landlord/tenant relations, local ordinances and the benefits of generating passive income through collecting rents.  Lastly, in terms of entrepreurship, one of the biggest ways American families have traditionally started small businesses was to pull equity out of their homes to cover start up costs."

After decades of making gains, the most recent nationwide African-American homeownership rate was the lowest it's been since the Fair Housing Act of 1968 began tackling discriminatory housing practices.

Historically, homeownership has been 28.4 percent higher among whites than blacks, but the racial gap in homeownership is now the largest since data became available in 1940, Spader said.

Homeowners generally build equity that allows them to eventually buy other homes or businesses and send children to college. Homes also are passed to younger generations upon death, allowing future generations to build wealth.

Chicago Tribune article "Why black homeownership rates lag even as the housing market recovers" 7/21/17

I've blogged about the Cook County Land Bank in the past.  Jones said, "Our indirect connection to the Cook County Land Bank Authority  is that many of the homes being offered through that program are found in black communities.  Instead of waiting for big developers to come in, buy up these properties, rehab them and sell them to renters living in the community at market rates without any equity, our goal is to help renters understand the value of purchasing on a lower cost basis, facilitating the rehab process for themselves and starting out with some built-in equity."

Saturday's event will not just focus on prospective buyers.  Another goal is to help current homeowners to remain in their homes.  Foreclosure prevention attorneys will be on hand to offer free consultations to current homeowners who might be facing challenges with their mortgages.

When asked why he thinks it's so important for more families of color to return to homeownership, Jones summed it up by saying, "In owning property—and paying taxes—as a community you have a voice in public policy. If you’re not at the table then you’re on the menu.”

 

Thanks to subscriber Anneliese for suggesting this topic.

 

WHO: Chicago’s oldest African American real estate trade association, Dearborn Realtist Board, MB Financial Bank and Freddie Mac

WHAT: Building Black wealth through homeownership via “Community Wealth Building Day” (Free to the public)

WHEN: SATURDAY, OCTOBER 28TH, from 8:30AM to 2:30PM

WHERE: CHICAGO STATE UNIVERSITY LIBRARY (4TH FLOOR ATRIUM)

9501 South Martin Luther King Dr., Chicago, IL

 

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