Our Racially Divided Housing Market Is Changing, Thanks to Millennials By Joe Szabo, Scottsdale Real Estate Team
By Joe Szabo, Scottsdale Real Estate Team
Kieran Killeen was astounded when he bought a home in Vermont in 2002, and its title barred minorities from living there unless they were servants.
They were empty words. Racial covenants are no longer legal.
But Killeen, who is white, did not like having even a defunct racist restriction on his home’s title. He worked with neighbors to have it removed from his and 121 other homes in South Burlington.
Such covenants were once encouraged by the government. The language on Killeen’s title matched that used by the Federal Housing Administration in the 1930s: “No persons of any race other than the white race shall use or occupy any building or any lot, except that this covenant shall not prevent occupancy by domestic servants of a different race domiciled with an owner or tenant.”
“It took 70 years to undo the paper trail of institutional racism,” Killeen noted.
Unfortunately, this is not just history.
Racial covenants and other practices from the housing market’s racist past carry forward in the form of segregated neighborhoods and diminished wealth. They laid the groundwork for the terrible financial toll that black and Hispanic communities, in particular, paid during the Great Recession. Even redlining, a common practice from decades ago in which lenders denied loans in minority communities, has made a bit of a comeback in the wake of the housing crisis.
Promising demographic trends could improve the outlook, but some say that’s not enough.
Millennials narrow the racial gap
For more than a century, there has been a persistent gap between white and minority homeownership rates. The most recent data show that 71 percent of whites own homes, compared with 41 percent of blacks, 45 percent of Hispanics and 58 percent of Asians, according to the U.S. Census Bureau’s American Community Survey. The good news is that the youngest generation of homeowners — millennials — is more diverse. And they’re driving the housing market more than people realized, according to Zillow Group’s Consumer Housing Trends Report.
“While minorities remain underrepresented among homeowners, that is changing as a younger, more diverse set of buyers enters the market,” said Zillow Group Chief Marketing Officer Jeremy Wacksman.
In fact, half of all home buyers are under age 36. Although the housing market as a whole skews heavily white — with black, Latino and Asian homeowners each representing less than 10 percent of the market — there’s greater diversity among millennials in general, and among millennials who own homes.
Only 66 percent of millennial homeowners are white — much closer to whites’ 61 percent share of the general population.
It’s also encouraging that Latinos and Asians have begun to narrow the gap between their homeownership rates and that of whites. But the gap between whites and blacks has widened.
Blacks face the longest odds
Aside from a run-up during the housing bubble, the homeownership rate for African Americans appears to be in a long-term slump. The trend going forward is “uniformly worrying,” according to a 2015 report from The Urban Institute. “Erosion of homeownership for blacks threatens to undermine their ability to gain and maintain economic stability, not to mention build assets.” That bleak picture follows decades of gains. The economic fortunes of African Americans began to improve after the Fair Housing Act of 1968, when it became easier to challenge redlining, racial covenants and other forms of discrimination. By the 1990s, blacks had finally established a foothold in the housing market.
However, during the housing bubble, many of them fell victim to mortgages that were unwise, and in some cases downright predatory, said Rolf Pendall, co-director of the Metropolitan Housing and Communities Policy Center at The Urban Institute.
“If you owned a house in a community where only 40 to 45 percent of people owned houses, and you had friends and neighbors and cousins, many of whom were less well off than you were, you might take money out [via refinancing] because you’re helping people get through,” he said.
At that time, even African Americans and Hispanics with strong credit were steered toward subprime or predatory loans, said Coty Montag, deputy director of litigation at the NAACP Legal Defense and Educational Fund. A former Justice Department attorney, she helped litigate a Department of Justice case against Wells Fargo for such steering that led to a $234 million settlement.
As a result, black and Hispanic neighborhoods were hit harder and have bounced back more slowly from the housing crisis.
“We look every day at sad faces when people are not able to get those loans,” said Antoine Thompson, national executive director of the National Association of Real Estate Brokers. It’s the oldest minority real estate trade association in the country, representing African-American and other minority real estate professionals, and it supports movement toward a new credit scoring model that takes into account rent and utility payments as well as non-traditional forms of income.
The Great Recession meant a tremendous setback, compounding earlier forms of housing discrimination.
Those historical practices included government-sanctioned redlining and racial covenants in the mid-20th century that kept blacks from buying homes and building wealth at the same time whites were.
The private sector also played a part back then, Montag said. “Real estate agents would not show African Americans homes in all-white neighborhoods, banks would refuse to grant African Americans conventional mortgages, and contractors could not get financial backing to construct homes for African Americans in white neighborhoods.”
There were also personal assaults, sometimes literally.
“White homeowners would actively discourage African Americans who tried to move to their neighborhoods,” explained Montag. “In some areas, there would be violence or other ways of discouraging new black neighbors.”
Being aware of the past’s injustices is the first step in understanding homeownership among African Americans today.
“Homeownership is the number one way wealth is built in America,” Thompson said. “Whether it was redlining by the government, issues related to African Americans who came home from World War II and did not have access to the GI Bill to go to college, or to government-sponsored loans that created the suburbanization of America: We cannot ignore those realities, which played a significant role in where we are today.”
Read more about African Americans and homeownership.
I still walk in sometimes and can’t even believe it’s the same room. Of course, there have been many other updates and projects to get this look, but the shelves definitely set the stage.
Let’s get started!
But 3D printing could be the silver bullet. ICON, a construction technologies company, designed a 3D printer to produce homes. A single-story home, with a total footprint measuring 600 to 800 square feet, can be printed in underserved communities in less than 24 hours.
The cost? Just $4,000.
“3D printing can deliver a house — and I mean fully deliver ready to move in — for about 30 percent less than conventional building,” explains Jason Ballard, ICON’s CEO and cofounder.
About a year ago, New Story and ICON partnered to print 100 homes in El Salvador. To test the technology, they printed a prototype in Austin, TX this March. It’s the first site-printed, permitted 3D-printed home in the U.S.
“One of our favorite things to hear about as we unveiled it was, ‘Holy cow, I would live in that house,’” Ballard recalls. “And that really made us feel like we had succeeded.”
The prototype shows off what the technology can do — like printing curved walls and a sloped roof as easily as straight lines. The Austin home was printed in 47 hours, with the machine at quarter speed. ICON expects homes to be printed in 11 to 12 hours at full speed.
The prototype was printed to last in a developing country, not just Texas. Made of concrete, it’s strong and cool enough to withstand extreme temperatures, hurricanes and even earthquakes. Bonus: Printing homes produces zero waste.
“We wanted to make this feel like the kind of house you could feel proud to live in,” Ballard adds. Knowing concrete can feel stark and uninviting, they planned the design to incorporate lots of natural light. The windows, roof and doors were added after the printing was complete.
While the homes in El Salvador will be similar in size to the prototype, each design will be custom. New Story hosts workshops in each country they serve, asking families what they want in their future homes.
“Unfortunately, they’re not used to being asked for their input and their opinions,” Hagler says. “But when it finally clicks that we not only care, but we’re actually going to implement what they say — it’s really beautiful to watch.”
Each home will have 1 to 2 bedrooms, a bathroom with a shower and toilet, and a living room. The rest is up for debate.
“It’s about shelter, but it’s also about dignity, respect and ownership of your home,” Hagler adds.
If the printing goes well, more communities will follow.
“This really is a paradigm shift,” Ballard notes. “With this technology, we can imagine for the first time what it would be like to end homelessness as a lack of shelter.”
