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A Fraught Path to Homeownership

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How do diverse groups of working- and middle-class professionals afford to live in the Greater Boston area? Turns out many don’t. Or can’t. The “why” is interestingly complicated. And simple, too.

Edward Golding, former head of the United States Federal Housing Administration, is Executive Director, MIT Golub Center for Finance and Policy.

“There’s a 30-point gap in the homeownership rate between white households and nonwhite households in the United States,” says economist Edward Golding, Executive Director, MIT Golub Center for Finance and Policy. 

According to reporting from the Boston Globe and the Boston Foundation, 66% of white households own their homes compared with 35% of Black households and 30% of Latino households, nationally. In Boston, where homeownership rates are generally lower, U.S. Census data show that 30% of Black and 15% of Latino households own homes.

“The 2008 economic crisis erased homeownership gains for many minority households,” Golding said. “These were policy choices.”

Homeownership is expensive and the dollar’s purchase power has been weakened by inflationary pressures, among other things. Potential homeowners must contend with a supercharged housing market and, when they have them, savings that don’t always stretch to accommodate the American dream. Nominal wage growth has been low and flat since America’s economic recovery began in 2009, says the Economic Policy Institute. Additionally, “America doesn’t really build at the lower end of the socioeconomic scale,” Golding notes.  

Even the language surrounding homeownership is challenging. “We need a whole new language to describe housing and shelter,” said Justin Stiel, Spaulding Career Development Assistant Professor of Law and Urban Planning at MIT. “We have to treat individuals and families with dignity.”

Scarce Opportunities, Byzantine Laws

Golding, who worked under former Housing and Urban Development secretary Julian Castro during the Obama administration, noted the gap in homeownership persists for myriad reasons, including redlining and legislative exclusion of minorities from homeownership opportunities, and was skeptical of the possibility of narrowing it. “We’d need to create Black homeowners at a rate approximating 10,000 homes per week,” he reported.

Additionally, there’s a hodgepodge of regulations related to affordable housing at the local level with no national guidance on how to create market-rate housing. Rather than adhere to these confusing regulations, developers would rather build high-end housing which ends up being out of reach for the working and middle class. “Affordable housing in many areas is being converted to high-end housing stock,” Golding says.

Justin Stiel is the Spaulding Career Development Assistant Professor of Law and Urban Planning at MIT.

“Exclusionary zoning in the Greater Boston area began in the 1960s,” Stiel reports. “Single-family homes occupying large lots create land scarcity, which increases home values, which benefits these homes’ owners.” 

Government Interventions and Related Challenges

When asked about the kinds of legislative impediments that prevent the creation and sustenance of affordable housing in the Greater Boston area, MassHousing Executive Director Chrystal Kornegay’s answer was decisive.

“Zoning rules vary widely by cities and towns,” she said. "There’s a lack of zoning consistency across the Commonwealth, which makes it difficult to address.” Good zoning, she remarked, can help cities and towns plan for growth. “We don’t plan for growth,” she continued.

While MassHousing is primarily tasked with providing financing for aspiring homeowners, they also consult on construction planning and site selection for developers. The diversity of its offerings has provided Kornegay with a unique window into the challenges potential homeowners can face.

Chrystal Kornegay, formerly Massachusetts' Undersecretary for Housing and Community Development, is the Executive Director of MassHousing, an agency charged with providing financing for affordable housing.

Kornegay, Golding, and Stiel described a confluence of other factors leading to an ongoing housing shortfall in the area including the privatization of social housing, a lack of viable financing options for folks at the lower end of the socioeconomic spectrum, and troubling transportation options and accompanying infrastructure. 

“More people want to live here than there are houses to support them,” Steil stated.

The federal government’s foray into housing, including providing subsidies and other practical and legal support for underserved populations, produced opportunities for households that might not otherwise have had them. However, political winds can shift, and with them the government’s stomach for New Deal-style programs meant to level the playing field for folks seeking to own homes. 

“Government shouldn’t walk away from housing as a social good,” Kornegay noted. “We know how to do this;  we provided robust housing support for veterans returning from World War II, for example.”

Strategies and Solutions

There are opportunities to address the kinds of challenges Golding, Kornegay, and Stiel have observed, from increases in supply to a loosening of land use restrictions. Still, Kornegay says, there are no magic wands for this work.

“You need a little bit of everything over time,” she stated.

“Let’s leverage Big Data to track local homeownership data,” Golding recommended. “We can model financing and other interventions to support these potential buyers’ needs. 

“We can amend funding options to ensure subsidies reach their intended populations,” Stiel said. “We can also override exclusionary zoning, with Massachusetts requiring municipalities to zone in a more inclusive way.” Stiel also recommended implementing legal protections like community land trusts to set aside plots for more inclusive housing, which could dampen the accrual of homeowner value and the kind of land speculation that prices working- and middle-class buyers out of the market.

“We can subsidize borrowing for folks at certain income tiers to foster socioeconomic diversity in neighborhoods,” Kornegay offered. “But what we need most are community advocates, people willing to attend zoning board meetings and speak on behalf of these populations when decisions are being made.”

For more info Benjamin Daniel Assistant Director, DEI Communications (617) 324-2434