By Eugene T. Lowe
July 12, 2004

Peter Beard, Senior Vice President, Policy and Information of the Fannie Mae Foundation, presented the findings of a study on the growing affordablility problems of urban minorities as they become homeowners. Beard addressed the Sunday morning Plenary Session June 27. He said that while blacks and latinos in cities have benefitted from the largest increase in the overall national homeowership rate in a single decade since the 1950s, both minority groups are still behind white homeownership. The national homeownership rate increased from 64.2 to 66.2 percent over the last decade. Yet, in the 25 largest cities in the nation, whites homeownership is 53.4 percent, while 38.1 percent and 32.3 latinos own their own homes.

Beard said, however, that minority homeonwership has increased. According to the Fannie Mae Foundation study, Beard said, "In our 25 largest cities, the number of black homeowners increased by 16 percent. Even more impressively, the number of latino homeowners jumped by 54 percent."

But there is a "severe affordability problem" associated with the minority increase in homeownership. Beard explained that, "When a household spends more than 50 percent of its gross income on housing, that household is facing a big problem." He added, "Nationally, the number of homeowners with severe affordability problems rose by 52 percent between 1990 and 2000." The situation gets much worse when you look at minority homeowners. Beard said that one in seven black homeowners living in our 25 largest cities was spending at least half of the household's income on housing. One in eight latino homeowners faced the same predicament.

The most alarming data of all show the quick increase in the affordability problem for minorities. Again, looking at the 25 largest cities, the number of black and latino homeowners with severe affordability problems increased by 39 percent and 98 percent, respectively. Beard said: "For both groups, growth rates for severe affordability problems were roughly twice the pace of the overall homeownership growth."

Beard outlined a number of actions that can and should be taken to address the affordability problem. First, there must be research on affordability problems to provide an early warning radar picture of the potential danger. We also must "provide homeowners with training and information on family finances through financial literacy education and materials. Beard also said that "the government needs to crack down on predatory mortgage lenders that target minority households in urban areas." He also suggested that cities with rapidly increasing home values might want to consider property tax relief for low-income homeowners. Finally, he said that housing must be ensured higher priority on the national policy agenda.