How can homeownership grow? Report offers ideas

Housing discrimination exists across Arizona despite laws and policies to try to reverse the predatory practices.

Researchers at Arizona State University investigated how actions and regulations shape the housing market and limits homeownership and potential solutions to the problems created by discrimination against some buyers.

“A Brief History of Housing Policy and Discrimination in Arizona” by the Morrison Institute for Public Policy focuses on racial equity in looking at issues in six counties: Cochise, Coconino, Maricopa, Pima, Yavapai and Yuma.

“Although some policies have tried to reverse these practices and racial integration has drastically increased, the past still weighs on the present housing landscape of Arizona,” according to Morrison.

Morrison created an interactive resource that includes research on:

● History of housing

● Household vulnerabilities

● Legal barriers to affordable housing

● Hurdles for developers

The Maricopa County report focuses partly on south Phoenix, the only area of Arizona redlined by the federal government in the 1930s as a “hazardous” area for lending and building new housing.

That designation continues to hurt south Phoenix today.

“In the past, there were laws and policies that limited homeownership,” said Alison Cook-Davis, research director at Morrison. “But now we are having this bigger conversation of the racial wealth gap because of those policies.”

Morrison suggests several changes to overcome barriers to homeownership. Most require changes to government and industry practices.

They include:

Education and counseling

A study in 2010 determined that a lack of understanding of the homebuying process led to lower homeownership rates among people of color. Questions about how to buy a home, how to get a real estate agent, how to get a mortgage, and the best mortgage options were all cited as barriers to homeownership.

Data to improve credit scores

The credit system works against lower-income consumers who use less credit but still pay their bills on time.

Evaluate mortgages without demographic information

Race and gender still play a role in mortgage approvals because of implicit bias within the lending system. A University of California-Berkeley study found at least 6% of applications for mortgages by Black and Latinos were rejected but would have been accepted had the applicant been white.

Downpayment aid programs

Although several downpayment assistance programs are available in Arizona, most target first-time homebuyers and lower-income individuals. These two groups may include homebuyers of color, but it is not a guarantee.

Incentivize through a tax credit

Although there is a federal tax deduction for mortgage interest and property taxes, it requires individuals to itemize their taxes. One analysis showed that homeownership rates among low-income people of color would increase 610% if a tax credit were offered.

Government housing reparations

The Chicago suburb of Evanston, Illinois, passed an initiative for Black residents to receive up to $25,000 for mortgage and down payment assistance or home improvements because of past housing discrimination in the city.

Build more affordable housing

Despite its cost and complexity, creating more affordable rental housing allows more people to save money that can be put toward a down payment.

Coverage of housing insecurity on azcentral.com and in The Arizona Republic is supported by a grant from the Arizona Community Foundation.