Confronting the Homeownership Gap with New Pathways to Opportunity

*Based on supplemental analysis of data collected from the Financial Health Pulse® Chicago 2022 Report. For more information, contact learning@cct.org.

The homeownership gap continues to be the “talk” of the day. Whether the discussion is on Capitol Hill or the neighborhood block, there is a prevailing recognition that disproportionately lower rates of Black and Latinx homeownership are a problem that profoundly impacts our society and economy. Owning a home is no longer an aspirational dream for few; it is becoming a necessity for the health of our economy. Growing research has demonstrated that the homeownership rate multiplies the entire community, aiding more jobs, commercial development, community stabilization and safety, civic engagement, and a host of economic benefits for homeowners and renters alike. For these reasons, The Chicago Community Trust regards increasing homeownership for Black and Latinx residents as a critical priority for wealth building in the Chicago region. Homeownership plays a significant role in building household wealth for Black and Latinx individuals and is a vital component of civic and economic development at the neighborhood level. 

Our city remains far from the goal post of closing the racial and ethnic homeownership gap. According to the Financial Health Network, nearly half of white households (49%) under age 45 own homes, while only 18 percent of Black households and 42 percent of Latinx respondents in the same group own homes.*   

What will it take to close this gap? Developing affordable housing and homeownership opportunities is complex because it sits within the intersection of supply and demand. The demand for housing across the U.S. is growing rapidly and outpacing the availability of housing supply. The cost of building homes continues to increase, and rising interest rates impede new homeowners. It is in the context of this reality that housing advocates and practitioners work hard to develop and advance homeownership solutions. And yet, organizations such as The Resurrection Project, Lawndale Christian Development Corporation, Chicago Urban League, and others (some of which you will see below) simply will not give up because it is a cause worth fighting for.  

Advancing homeownership is about more than applying tactics to balance market forces. It is about cultivating a community’s assets, realizing the dreams of families and individuals in those communities, and benefiting our entire city, all the while ensuring that Black and Latinx residents can grow in place. Andre M. Perry, a fellow at Brookings Institute’s Metropolitan Policy Program and author of “Know Your Price,” articulates this well. “We must restore value iteratively in ways that empower and support those who have been committed to the neighborhoods without pricing them out.”  

The Financial Health Network also found that 71 percent of Black and 67 percent of Latinx renters under age 45 report extreme difficulties covering the upfront cost of buying a home.* The Trust also commissioned research by Urban Institute’s Housing & Policy Finance team and New America’s Future of Land and Housing on lending patterns in Chicago and the types of capital available for advancing affordable homeownership. The Urban Institute study noted that while Black Chicagoans account for 22 percent of the city’s homeowners, they only receive 14.5 percent of purchase mortgage lending. A closer examination of why capital is not as available to Black and Latinx Chicagoans reveals that the disparity is more a systematic than a product issue. The New America report highlighted three barriers to financing homeownership for low-to-moderate-income households: affordability, access to credit, and a lack of information. 

The research findings show a lack of purchasing power for Black and Latinx buyers. Black and Latinx people desire homeownership, and the inability to obtain it is not due to an absence of “hard work” or motivation. Instead, a system that suppresses buyers from having enough capital to pursue (or maintain) homeownership is at play. The Trust’s new funding program, Advancing Innovative Homeownership Financing Solutions, is supporting partnerships of lenders and housing organizations to work together to innovate homeownership financing solutions that increase the purchasing power of Black and Latinx buyers. This includes financing solutions such as first and second mortgages, equity-building products, and downpayment assistance programs that can be reshaped and perhaps reimagined to reach all types of homebuyers. At the core of this program is a belief that funding collaboration among stakeholders with diverse skills will advance innovation. We recognize that the success of financial interventions depends on an enabling environment of equitable policy, process, and development. Therefore, this grant also provides a suite of services to each organization to advance not only their project goals but also their partnerships and learning and development. During the grant year, the Metropolitan Planning Council, through its Change Lab model, will provide training via a Community of Practice to help each partnership build the knowledge and skills necessary to affect structural change. 

What we hope to see through all of this is a return on the investment made in creative collaboration between lenders and housing agencies. As a result of these projects, we anticipate a greater flow of capital for prospective homebuyers in Black and Latinx communities, as well as an increased ability to stay in place for existing homeowners of these populations. 

A lack of opportunities for Black men and women demands innovation, creativity, and more options for family-not fewer. 

Andre M. Perry, “Know Your Price”

The Trust’s Advancing Innovative Homeownership Financing Solutions funding program supports the following partnerships. 

• Lawndale Christian Development Corporation, The Resurrection Project, and Center for Community Self-Help: Project support for Reclaiming Communities, a homeownership effort to build and rehabilitate 1,000 homes on Chicago’s West and South sides. The Center for Community Self-Help will work with The Resurrection Project and Lawndale Christian Development Corporation to offer affordable home loan products for potential homebuyers. 
• Neighborhood Housing Services, Chicago Urban League, and Self-Help: Neighborhood Housing Services of Chicago, the Chicago Urban League, and Self-Help Federal Credit Union have joined together to plan and design innovative loan product(s) and outreach programs to reach Black and Brown potential homebuyers to help them obtain a fairly priced home loan. The grant will support the planning and design of financial solutions for a new equitable loan product. 
• Northwest Side Housing Center, Northwest Equity Assurance Program, and DePaul University Institute for Housing Studies: The Northwest Home Equity Assurance Program is a comprehensive, collaborative effort between Northwest Side Housing Center, the Northwest Home Equity Assurance Program Fund, and DePaul University’s Institute of Housing Studies. Funding has been provided to advance the development of zero-interest community loans and grants to current homeowners on Chicago’s West and Northwest sides. 
• Habitat Chicago, Oak Park Regional Housing Center, and Far South Development Center: Habitat Chicago will work with Oak Park Regional Housing Center and Far South Community Development Corporation to create a new loan product that takes into consideration factors of homebuyers and homeowners in West Pullman and Austin. The product will consider income level, the availability of vacant land, the percentage of owner-occupied units, and the diversity of housing stock.