What will it take to address the persistent discrimination that drives down home values for Black families? A LISC webcast featuring Andre Perry tackles the question as part of an ongoing conversation about Project 10X, LISC’s $1 billion strategy to narrow racial gaps in health, wealth and opportunity.
What will it take to address the persistent discrimination that drives down home values for Black families?
A recent LISC webcast tackled the question as part of an ongoing conversation about Project 10X, LISC’s $1 billion strategy to narrow racial gaps in health, wealth and opportunity. Equitable homeownership is a critical piece of the overarching Project 10X strategy.
The challenges are significant, noted Andre Perry, senior fellow at Brookings Institution and author of Know Your Price: Valuing Black Lives and Property in America’s Black Cities. He described data that shows homes in majority-Black communities are, on average, valued at 23 percent less than the same home would be in a white community (controlling for such things as neighborhood amenities, crime, walkability, etc.) That gap represents $156 billion in lost equity—enough capital to launch 4.4 million Black-owned business or support 8.1 million four-year college degrees for Black youth.
Webinar Recording
“The effects of redlining, which were specifically around homeownership, have left an imprint on every single aspect of our communities,” agreed Julia Gordon, president of the National Community Stabilization Trust (NCST), who moderated the panel discussion. “Whether it’s education; whether it’s health; whether it’s public safety: everything tracks those old redlining maps,” she said. As such, investing in ways that root out the “racialization of where we live” can deliver broad-based benefits for people and communities, she added.
LISC is taking on the issue of wealth-building through homeownership in a number of ways—all driven by and tailored to communities, but also testing approaches that others can draw on to meet local needs, explained Denise Scott, LISC executive vice president for programs.
In Detroit, for instance, the city’s 0% Interest Home Repair Loan Program has helped upgrade more than 550 properties since it was launched in 2015, as Detroit was trying to slow the rapid loss of population and wealth throughout its neighborhoods.
In the process of managing the loan program, LISC discovered a number of associated problems that affected whether homeowners could realize the full value of their homes. Some people owned their house but not the land it is on. Others had “heirs” issues, whereby a property had been handed down to them by a family member, but they did not hold the title. Still others faced municipal liens.
Without settling these legal issues, homeowners aren’t able to access capital to make repairs—even when that financing is free. LISC helped provide legal and financial counseling, as well as coaching on debt so homeowners could plan for the future.
“I think the biggest impact of the program was that as it increased the value of individual homes with the [home repair] loans, it started to increase value across the market at a time when the market in Detroit was stalled, ” Scott said. “Housing values went up, and the market values went up. This helped people who might have otherwise walked away stay in their homes.“
“These initiatives are viable,” Perry added. “They can accelerate wealth creation. They just need funding to get to a scale where they have greater impact.”
Because LISC operates nationwide, lessons learned in one location can inform work in other markets. In Jacksonville, Fla., for instance, the local LISC program is leading an innovative pilot program in collaboration with the University of Florida and the Community Foundation of Northeast Florida and others to address a range of interrelated homeownership issues—from the fairness of appraisals to taxes to home repairs and title issues.
The strategy focuses on the preservation, protection and production of properties that ultimately help create generational wealth for local families, noted Dr. Ivan “Pedro” Cohen, executive director of LISC Jacksonville. “Each $100,000 invested in community interventions—legal and financial counseling services—preserves $1 million in assessed value, a 10 to 1 ratio in terms of return on investment.”
Webcast viewers posed a number of fundamental concerns, including whether community investment efforts could drive gentrification and displace the very residents the strategies are meant to help.
Perry noted how gentrification ties back to stable homeownership, and business ownership as well. “When people are owners, they are benefiting from increased values,” he said. “What is problematic is that homeownership is so low, business ownership is so low, that when you develop a place, property values increase and it pushes people out.”
In all of this, philanthropic donors and investors can play a vital role in helping narrow racial gaps and stabilize communities. “[Philanthropy] really is the runway to bringing together flexible, long-term capital that we can use to innovate,” Scott explained.
Perry agreed, citing the work of some philanthropic organizations to provide capital for mortgages that respond to the needs of underserved communities or design innovative credit scoring systems that make homeownership more equitable.
He urged funders to look closely at the organizations and initiatives they back and make sure those groups are interested in supporting the success of Black people, not just in building bricks and mortar in Black communities.
“If we can share these success stories with data, with narrative, then we can actually get the kind of change we’re seeing now [in local places],” he said. “Because [LISC has] great initiatives that we need to elevate at the national level.”
For more on Project 10X, visit https://www.lisc.org/project-10x/