By Preeti Vissa
Two new federal government reports — neither of which got a lot of press — suggest continuing trouble in the housing market, meaning continuing trouble for the economy. And, in a pattern we’ve seen so often that it’s ceased to be surprising, communities of color are faring the worst.
According to U.S. Census data released this week, homeownership rates have dropped to their lowest level since 1998. Homeownership rates for Hispanics and African Americans have dropped nearly twice as much as for whites (2010 data for Asian Americans and Native Americans have not yet been reported).
The census report was released almost simultaneously with a White House release of data from the Home Affordable Modification Program (HAMP) showing that only 472,619 homeowners have received permanent loan modifications in the past year.
These two reports neatly summarize a dangerous trend. Millions of Americans are in near-term danger of losing their homes, and relatively few are getting relief. This represents a massive drain of wealth from Latino and African American communities, who were starting with homeownership rates some 25 points lower than whites. While we don’t yet have 2010 data for Asian Americans or Native Americans, their trend through 2009 showed a drop in homeownership similar to Latinos and African Americans.
Although fighting foreclosures is critical, we must also quickly get ahead of the curve in creating a new homeownership paradigm for sustainable homeownership. With homeownership rates for Latinos, African Americans and Native Americans dropping so much more rapidly than whites, this disparate drop in homeownership will only exacerbate the growing racial wealth gap.
This loss of stability and wealth will have long-term implications for the economic viability of communities. Particularly disturbing is the fast-growing media narrative suggesting thathomeownership is “not for everybody” and that people of color caused the foreclosure crisis – a narrative advanced by influential publications like Time. This sentiment is reflected in the shrinking sources of credit for communities of color.
But the foreclosure problem isn’t limited to low-income communities. The San Francisco Chroniclerecently reported that in that city, one of the nation’s priciest housing markets, foreclosures are increasing in more affluent neighborhoods.
So far, neither Republicans nor Democrats have gotten behind anything resembling a serious answer to this crisis. The administration seems intent on pretending that the badly flawed HAMP is a sufficient answer. Republicans, on the other hand, want to get rid of HAMP but have nothing to offer in its place.
That’s not good enough. It’s easy to forget, but foreclosures affect far more than the families losing their homes. Large numbers of foreclosures suck the life out of communities. Empty, boarded-up homes depress property values. Local businesses lose customers and are forced to lay off workers, who in turn may lose their own ability to afford housing, perpetuating the downward spiral.
I wish I saw signs of the political will needed to take on this crisis, but thus far it’s not apparent. One thing I know for sure: Wishing the housing crisis away or pretending it’s not there won’t work.