Expand Homeownership: Improve access to homeownership, especially among low-income residents, people of color, and indigenous people.
Homeownership has given generations of Minneapolitans the opportunity for housing stability and wealth development. However, these opportunities have not historically been available to all city residents. The combination of past racially restrictive housing policies and current lending practices have significantly reduced homeownership opportunities for people of color in particular African-Americans, Hispanics, Asian-Americans, and indigenous people.
Although income is the largest factor in purchasing a home, even high-income households of color still face denied access to credit or are issued higher loan origination rates. In 2005, according to the Home Mortgage Disclosure Act loan data, very high-income African-Americans, Hispanic, and Asian applicants with incomes of more than $157,000 per year had denial rates higher than white applicants with incomes of less than $39,250 per year, with the greatest disparities among African-American applicants. In 2018, the Department of Justice settled its second-largest residential fair-lending case for $175 million, finding that the nation’s largest home mortgage lender participated in discriminatory lending practices. Borrowers of color were directed to sub-prime loans, charged higher fees, and received higher interest rates while white borrowers with the same credit risk profile were directed to less risky and more traditional mortgage products. When the housing market crashed in 2008, mostly subprime loan borrowers – largely households of color – faced foreclosure, lost the equity in their homes, and had to re-enter the rental housing market with damaged credit and limited assets.
Today in Minneapolis, there is a 36 percentage point gap between households of color that own their home versus white households. Over 59 percent of white non-Hispanic households own their home, while less than 21 percent of African-American and American Indian households own their home. Just under 25 percent of Hispanic households own their home.
The City can work to overcome the legacy of past barriers as well as current barriers in accessing homeownership for all people, specifically reducing racial disparities within homeownership. These actions are not just investments in filling the financial gap between the cost of a home and what buyer can afford; they are investments in people to help develop the skills and capacity to support homeownership.
The City will seek to accomplish the following action steps to improve access to homeownership, especially among low-income residents, people of color, and indigenous people.
- Support nonprofit organizations that provide financial counseling and homebuyer education to build homeownership capacity among low- and moderate-income households, especially households of color.
- Support wealth-building housing models and local credit unions or financial institutions with a particular focus on empowering communities of color, low-income renters, and cultural communities.
- Prioritize outreach to local developers and businesses owned by people of color, indigenous people, and women, in the administration and development of City-funded housing projects.
- Evaluate programs on how well they serve communities of color, low-income renters, and cultural communities using clear, measurable indicators.
- Support services that promote post-purchase counseling and foreclosure prevention and other services.
- Develop tools to support long-term affordability when the City makes investments in housing, including community specific equity sharing models such as housing cooperatives or land trusts.
- Develop a marketing campaign of existing homeownership resources that includes low-income residents, communities of color, and indigenous people.
- Increase homeownership in existing multifamily buildings by adopting ordinances guaranteeing right of first refusal and/or opportunity to purchase when buildings are sold.
- Explore the creation of a public bank to further this goal.
- Explore providing downpayment assistance and loan forgiveness programs to further this goal.
- Explore and encourage new and innovative homeownership opportunities.