A Perspective on Homeownership for 2023 and beyond.
Pictured above: The author in front of his first home (Oakland, CA).
By Adam Briones
Beginning with our founder, John Gamboa, and continuing through my own leadership, California Community Builders has always prioritized putting safe, affordable homeownership opportunities within reach of working-class families of color. But every now and again we get questions asking, “Why homeownership”? It feels appropriate to use CCB’s first blog post of the year to lay out our perspective on the relative merits of homeownership – imperfect, but incredibly valuable – as well as how we think about its shortcomings, and what we believe a productive path forward looks like.
Why homeownership?
I mentioned to a friend recently that promoting homeownership feels a little like telling people to root for the New England Patriots in 2018, in the sense that we’re asking for policymakers and advocates to root for and resource something that feels like it is already on top. And in some ways – but importantly, not in every way and not for everyone – it is.
Broadly speaking, homeownership has been the U.S.’s default prescription for most families for nearly a century, thought of as the final step in a natural progression that starts with living with your parents, then renting an apartment, and finally, owning a single-family home in the suburbs. This version of “The American Dream” is about as successful a branding campaign as one could imagine, even if we all know that people of color were actively shut out of homeownership until very recently.
Personally, I’m of the opinion that the aspirations of most Americans are much larger and more diverse than simply owning a home, and that we use “American Dream” as shorthand for other, truly universal dreams like stability, safety, independence, and the ability to pass something on to our kids when we’re gone.
Regardless of what we call it, homeownership is undeniably a pillar of our society, with almost 75% of Americans calling it the highest marker of prosperity. In 2021, about 6.1 million homes were sold in the U.S., with more than 400,000 of those in California alone. In addition, a robust public and private infrastructure exists solely to put Americans in homes, including the congressionally chartered agencies Fannie Mae and Freddie Mac, the mortgage interest deduction and other tax laws. To top it off, property rights are one of the most, if not the most, sacred concepts in our country.
In the economy that exists today and for the foreseeable future, homeownership represents the most likely path toward building wealth for families of color – families that have been too often shut out of this modest goal, which was so readily made possible for other Americans. According to the Urban Institute in 2018, homeowners are frequently able to build wealth...“in a variety of ways, with tax advantages, greater financial flexibility due to secured borrowing, built-in ‘default’ savings with mortgage amortization and nominally fixed payments, and the potential to lower home maintenance costs through sweat equity.” According to the Federal Reserve Bank of St. Louis, about 50% of total wealth for Black and Latino families comes from homeowner equity. The Joint Center for Housing Studies at Harvard found that the household wealth of Black families who own their own home is about 60 times greater than for Black renters.
Of course, groups like CCB and other homeownership advocates don’t do this work to create full employment for mortgage lenders. We do it because we see it as the most realistic way to address one of the most pernicious aspects of our society: the racial wealth gap. Today in America, for every dollar of wealth held by white families, Black and Latino families only have about $0.12 and $0.20, respectively. Further, almost 20% of Black families have $0 in wealth, which means that they have nothing to fall back on in case of emergency and nothing to pass along to future generations.
Homeownership remains the number one way American working-class and middle-class families build wealth, and we simply cannot fix the racial wealth gap without addressing the fact that nationally, while 75% of white families own a home, only 45% and 49% of Black and Latino families own their own homes, respectively. In California those differences are even more stark, with white families at 60%, Black families at 37%, and Latino families at 44% as of 2019.
Why not homeownership?
That said, it’s important to acknowledge that homeownership is a tool, and, like any other tool, it has limitations. Homeownership is also an investment and if misused or abused it can also do real harm.
Like many other disturbing aspects of American history, the complicated – often very dark – history of homeownership should be required for every student. Too few people know that mass homeownership after World War II was built on racist foundations, with communities of color excluded from secure mortgages and banned from entire neighborhoods solely because they were not white. And perhaps even fewer know that this new generation of overwhelmingly white homeowners mobilized to keep the system racist — to keep people of color out of their communities and to elect leaders who would maintain exclusionary policies even after redlining and racial covenants were outlawed.
Schools have only recently begun to address small parts of this troubling history. Perhaps not surprisingly, this has provoked a backlash, with some states passing laws or regulations designed to strangle honest teaching about America’s history of racism.
More recently, many Americans seem to have forgotten that the push for mass homeownership in the 1990s and 2000s was built on shoddy foundations, with too many families being offered deceptive and predatory subprime mortgages in underinvested communities far away from jobs and community. These predatory loans created the foreclosure crisis of 2008, the largest loss of wealth for people of color in U.S. history and a crisis centered around homeownership.
Thankfully, there are academics and writers out there whom I deeply respect who ask us to think hard about the position and value of homeownership, including market failures like appraisal bias, the disparity in overall value of homeownership for people of color, and even “predatory inclusion.” While I disagree with the “homeownership is bad” perspective, I do think one of the best things that we can do as advocates for wealth building and homeownership is to engage with reasonable arguments from folks who disagree with us.
A reasonable path forward
So where do we go from here? If we know the value of homeownership, as well as some of the real policy failures associated with it, where does an organization like CCB sit and how do we think about our work in the future?
The short answer is that like most things in life and public policy, we believe that no one benefits from treating complicated problems with simple solutions. We must be able to compromise and to recognize the value in nuanced, thoughtful policy proposals. CCB works for the homeownership system that we could have, not the one we do have. We work on the practicalities of homeownership, not the ideologies or myths and believe in a pragmatic approach, one that is informed by history but not bound by it.
The longer answer is three-fold:
First, we must recognize that there are no magic public policy bullets out there that will fix our racial wealth gap or housing crisis all at once, and every policy has trade-offs. Our state and country need a diverse portfolio of solutions to address a diverse set of problems, many of which operate simultaneously but on different timelines. For example, the systemic racism that people of color, particularly Black Americans, face is embedded in every aspect of our economy and will take generations to fully eradicate, but that doesn’t mean we can’t chip away at it right now.
Advocates like me must acknowledge that even if we are successful beyond our wildest dreams, the racial wealth gap and other economic inequalities won't be solved by homeownership alone. Even if we closed homeownership disparities tomorrow, it would only reduce, not eliminate, the overall racial wealth gap. To make lasting change, we also have to support solutions that build wealth and support our communities in ways that don’t require you to own real estate, or at minimum allow for economically stable, dignified lives whether or not you choose to own a home.
Second, while hoping for transformative change in the future, we need to grapple with the world that we live in today.
Yes, homeownership as an institution in our country has many failings but, to be frank, what foundational aspects of American society don’t? The medical field, higher education, journalism, banking, even how we’ve chosen to structure our democracy, all represent pillars of our country whose current structure makes it, at best, complicated for people of color to achieve economic, social, and political equality.
Does this mean we need to fundamentally restructure our society and economy, including the relative importance of owning property and other economic assets? Sure – but only as long as we simultaneously admit that those changes, if they ever come about, are unlikely to be fully realized in our lifetimes. We can – and, I would argue, we must –dream big for the long term and at the same time address the nuts-and-bolts problems of the world we live in today. As we think about the ways in which homeownership fails people of color today, we cannot simply accept inequality in a core facet of our society; we have to face it head-on and fix it.
My hope is that any analysis of the failings of homeownership would also include an analysis of the proposed alternatives. For instance, does a given critique of homeownership also recognize the importance of wealth and economic assets in society today? Does that critique propose what assets low-wealth communities of color should invest in to ensure that our communities don’t continue to fall farther and further behind white families? Does the critique acknowledge that homeownership not only creates a path to wealth-building, but it can also mean better, safer, more stable housing for families? And lastly, does the critique take the stance that historic redlining, whose explicit goal was to stop people of color from owning a home where they choose to, does not need to be addressed with a commensurate solution?
Third and finally, CCB believes that two things can be true at the same time. In the short term, homeownership will be the way in most people of color build intergenerational wealth. There’s simply been too much investment, infrastructure, and social buy-in of the concept for it to go away in the foreseeable future. Further, CCB also sees value in homeownership beyond the racial wealth gap. It can provide housing that is more secure, more comfortable, or even culturally appropriate. Done right, it can be better housing for certain people, including people of color, who want this form of housing. It's not only about wealth - it's about happiness and housing.
Still, that does not mean that homeownership is the only thing that we should focus on in perpetuity. It is ok to live in reality now and dream of a future where homeownership, while still valuable, could one day play a different role in how families grow, retire, and take care of one another over generations.
What this means for our work in 2023
While CCB fundamentally believes that homeownership, when done in an affordable, well-regulated manner, would make a meaningful difference in many families’ lives, we also know it's not for everyone and that there are real problems to be fixed within the larger system. This is similar to how we work to increase housing production of all kinds because we believe it will improve housing affordability overall, while at the same time acknowledging that the market will not serve everyone in every situation. These things are complex and don’t lend themselves to solutions based on slogans.
So, just as land-use fixes and upzoning form an important part of the solution but not the complete solution to our housing crisis, homeownership is one important tool, but definitely not the only tool, we must use to address the racial wealth gap. CCB supports homeownership not because it’s perfect, but because we know that we collectively can make it finally live up to its possibilities. We know we can create a more secure future for people of color using all of the tools at hand, a future where homeownership is a real and accessible choice for those who want it.
CCB will spend 2023 and the years after doing what we do best: identifying and implementing pragmatic solutions to address the racial wealth gap in a way that respects the needs of families today. And we will always keep our eyes open for innovative ideas that could be a reality someday, even if they will take time.
Adam Briones is the CEO of California Community Builders, where he leads efforts to end California’s racial wealth gap and housing crisis for communities of color.
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