- The Washington Times - Friday, July 5, 2002

In President Bush's radio address on June 15, he challenged "the real estate industry leaders to join with the government, with nonprofit organizations and with private sector financial institutions in a major nationwide effort to increase minority homeownership." The president and Housing Secretary Mel Martinez have stated that closing the homeownership gap that exists between white families (71 percent homeownership rate) and minorities (below 50 percent homeownership rate) and low-income families (52 percent homeownership rate) is a primary goal of this administration.
The response to the president's challenge was interesting to say the least.
Some on the left (including a Washington Post editorial), while acknowledging the worthy goal of reducing the homeownership gap, say the president's emphasis is misguided. They argue that for almost all low-income working families homeownership is an unrealistic goal and the president should provide more federal dollars for more public housing.
Some on the right, while acknowledging the disparity in homeownership rates (such as Roger Clegg in the National Review) do not believe that the federal government can or should do anything about it. This is the "let them eat cake" crowd. These critics reflect thinking that is both antiquated and elitist.
It is not so long ago that both the private and public financial institutions refused to serve women. In the 1970s, the Federal Housing Administration's mortgage insurance programs programs that brought homeownership to the middle class by creating the 30-year mortgage and reducing down payment requirements from 50 percent of the purchase price to as little as 3 percent would not issue mortgage insurance to single women. For two-earner couples, wives were routinely asked if and when they planned to have children. Just like the "Whites Only" signs that used hang in public buildings, these polices thankfully are long gone as both private and public institutions serve broad sections of the housing market.
Why focus new resources on homeownership? Critics will argue that the federal government already subsidizes homeownership through the tax code. Despite the dubious argument that money not taken from a family equates with money that is given to a family, it is true that once a family becomes a homeowner there are substantial tax savings available, as there should be. Research has indicated that homeowners create more stable neighborhoods, children do better in school and families can generate wealth that can be passed on from generation to generation. These are some of the benefits homeownership brings to families and communities, and it is these benefits that have their most profound impact on low-income working families. Low-income families cannot leave jobs to their children; however, they can leave wealth in the form of a house that can help keep a family out of poverty.
More important than the homeownership gap is the wealth gap. Dalton Conoly, in "Being Black, Living in the Red," reports that almost one-third of black families had zero or negative net worth in 1994, compared with less than 10 percent for white families. He reports that for households with incomes of less than $15,000 in 1994, half of all black families had zero or net worth, while less than a quarter of whites did. Even for wealthier households with incomes above $75,000, net worth for whites was almost three times that of blacks, or $308,000 vs. $114,600.
Currently, the Department of Housing and Urban development spends three-quarters of its budget ($23 billion) assisting low-income families rent apartment units. Many of these families could be homeowners contributing to the stability of neighborhoods and acquiring wealth that can be passed on to succeeding generations. The question that must be answered by critics on both the left and right is: Isn't it better to have a family pass on a wealth-generating house to their children then a public housing unit?

Robert L. Woodson Sr. is president of the National Center for Neighborhood Enterprise.

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