By Rex Richardson and Tunua Thrash-Ntuk
The city of Long Beach recently launched the “Everyone In” Initiative, to create a more inclusive local economy where all Long Beach residents can thrive. The initiative will set out best practices and policy solutions to deliver economic opportunity to all segments of Long Beach’s economy. On December 11, we hosted our first roundtable discussion with a group of experts around the issue of homeownership in Long Beach.
Homeownership remains one of the best ways to build intergenerational wealth and close the racial wealth gap. When people own their homes, they tend to be more financially stable, their children perform better in school, and their communities are healthier. But families of color and low-income families have been systematically locked out of the opportunities homeownership provides.
Recently, The Greenlining Institute and the National Community Reinvestment Coalition analyzed federal home mortgage data for 2015, examining statewide figures as well as lending patterns in Long Beach, Oakland and Fresno. They found some surprising trends in Long Beach.
Researchers found a persistent exclusion of low to moderate income families and people of color from the housing market. Although African Americans make up almost 14 percent of Long Beach’s population, they received just seven percent of home purchase loans. Latinos make up 41 percent of the population but received only 22 percent of loans, Asians make almost 13 percent of the population but received 10 percent of loans.
These racial disparities are “just the tip of the iceberg,” says report co-author Greenlining Economic Equity Senior Program Manager Vedika Ahuja. “The home mortgage data also paint a statistical portrait of gentrification.” More than a quarter of all home purchase loans went to low- or moderate-income neighborhoods, but only six percent went to low- to moderate-income people. “Put simply, higher income individuals are buying homes in working-class low or moderate income neighborhoods at dramatically higher levels than working-class residents who are often Black, Latino, or Asian,” she explained.
Additionally, we see the face of the mortgage market changing. You may be surprised to learn that the largest mortgage lender in Long Beach is not a bank, and seven of the top 10 mortgage lenders in our city are also non-banks.
What’s the difference? Traditional financial institutions like banks and credit unions don’t just make loans. They take deposits and offer savings and checking accounts, ATM services, and other family-supporting services. Non-bank lenders don’t offer those services.
They’re also regulated differently than banks. For example, the non-bank lenders aren’t covered by the Community Reinvestment Act, a vitally important law which requires banks to meet the credit and borrowing needs of the communities where they operate.
At a city level, Long Beach can expand pathways to homeownership for our most underserved communities. We can work with bank and non-bank lenders to provide more down payment assistance, helping families overcome one of the highest barriers to buying a home.
We can increase housing counseling and financial education availability to help people prepare for the responsibilities and challenges of homeownership. We can promote alternative forms of ownership, like community land trusts, that may be more accessible for those of modest means.
The “Everyone In” Initiative will explore these policy options through listening sessions with the community of Long Beach as well as roundtable discussions with policy experts, aiming to increase pathways to homeownership for every Long Beach resident.
Rex Richardson is the vice mayor of Long Beach, and recently launched the Everyone In Initiative. Tunua Thrash-Ntuk is the executive director of Los Angeles Local Initiatives Support Corporation and will lead the Everyone In think tank.