The Lead

Experts examine Philadelphia’s Black-white homeownership gap

By: - April 2, 2022 6:30 am
The Pew Charitable Trusts and the Federal Reserve Bank of Philadelphia hosted a virtual event titled “Closing the Gap: Black-White Homeownership Disparities in Philadelphia.”

The Pew Charitable Trusts and the Federal Reserve Bank of Philadelphia hosted a virtual event titled “Closing the Gap: Black-White Homeownership Disparities in Philadelphia” (Philadelphia Tribune photo).

By Ayana Jones

PHILADELPHIA — A group of experts and policymakers delved into ways to address racial disparities in homeownership during a virtual event held by the Pew Charitable Trusts and the Federal Reserve Bank of Philadelphia.

“For decades Philadelphia has had a reputation as an affordable place to live with a comparative high homeownership rate,” said Frazierita Klasen, senior vice president of the Pew Charitable Trusts.

“But Federal Reserve Bank research has shown … very little progress in closing the Black-white homeownership gap over the past three decades.”

Klasen said homeownership rates for both Black and white residents have declined and the gap between them has widened as households struggle to purchase or keep the family home.

Lei Ding, senior community development economic adviser at the Federal Reserve Bank of Philadelphia, said research indicates Black mortgage denial rates were about three times higher than for white applicants in the city’s historically redlined neighborhoods.

“One possible explanation is that even after discriminatory practices were banned by the laws residents in these neighborhoods continued to have less access to the more affordable mortgage products, less likely to have banking services and other products that are important to support a growing middle class,” Ding said.

“Consequently, Black households are more likely to be unbanked and more likely to have a lower credit score and in other words I think that Philadelphia’s racial homeownership gap reflects the legacy of the historical discrimination and longstanding inequality.”

Octavia Howell, manager of the Pew Charitable Trusts, said Philadelphia has the highest rate of Black homeownership among the nation’s 50 largest cites.

However, she highlighted information Pew complied on housing affordability in Philadelphia which indicated that some Black households are facing the challenge of being cost-burdened.

“In Philadelphia, one thing that we learned is that 53% of Black residents skipped out on making a significant property repair because they couldn’t afford to make it,” Howell said.

“That lack of affordability that goes beyond that cost-burden measure is a different type of threat to continued homeownership.”

“Those are properties that may be experiencing deterioration because that roof didn’t get fixed or the plumbing didn’t get taken care of and they impede the ability for homeowners to pass down their homes or be able to get the record value,” she continued.

Howell also spoke on how tangled titles are impacting homeowners’ ability to pass their homes down. A tangled title is a property title that does not accurately reflect the present homeowner’s claim to the home.

Howell cited Pew research that indicated there are more 10,000 tangled titles homes in Philadelphia collectively valued at more than $1.1 billion.

“I think there’s is often a lack of acknowledgement of the amount of value that exists in communities like North Philadelphia, like upper North Philadelphia — Black communities where property values are lower than parts of the city — but there still is value there,” Howell said.

Recognizing the importance of housing preservation, two elected officials spoke about efforts to assist homeowners with basic home repairs such as weatherization and maintenance issues.

“Although there is federal money there people find themselves navigating a system that is overwhelmingly complex, where funding is in different pots and they lack the ability to make basic repairs,” said Sen. Nikil Saval, who represents parts of Philadelphia. “So what we believe is that we should be funding repairs and coordination.”

Saval has introduced the Whole-Home Repairs Act, which would create a “one-stop” shop for home repairs and weatherization while building a workforce that could do the repair work.

City Councilmember Cherelle Parker, 9th District, highlighted the city’s new Restore, Repair, Renew program that helps homeowners access low-interest home equity loans to invest in their properties.

Parker also noted that City Council formed an appraisal bias task force to address the issue of the race gap in home appraisals and its impact on homeownership. She cited a Brookings report on biased appraisals that addressed the devaluation of housing in Black neighborhoods.

Parker said a statewide, intergovernmental system is needed to collect data on home appraisals.

“What we need to make sure we do is desperately create solutions for capturing the local data on the issue,” Parker said as she spoke about the need for equity in home appraisals.

“Much of the information is on the national level so we have to recruit more home appraisers of color so that they are more reflective of Philadelphia’s population.”

Robin Wiessmann, executive director and CEO of the Pennsylvania Housing Finance Agency, said the organization is working developing on a pilot program focused on minority homeownership in Philadelphia and Pittsburgh.

“We will be modifying underwriting criteria through very deep down payment assistance, as well as looking at evaluating purchase readiness and the ability to repay based on things other than prior homeownership, such as rent and utility history and different types of worker employment — periodic and gig employment,” she said.

Ayana Jones is a reporter for the Philadelphia Tribune, where this story first appeared

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