Let’s not sugarcoat it: America has a poor track record when it comes to equality and inclusiveness across many aspects of the social spectrum. That includes our history of housing.
People of color have not had a fair shake, period. The undervaluation of homes in poorly served neighborhoods, decades-long housing segregation, systemic denial of loans in predominantly minority areas, and extreme difficulty for Black and brown Americans to leave their families an inheritance have contributed to the nation’s race-based imbalance when it comes to finances and homeownership.
While the U.S. has a homeownership figure of about 66%, only 44% of Black Americans own their homes. Hispanics (51%) do not fare much better. Whites, on the other hand, have a 73% homeownership rate, while Asians come in at a healthy 63%, up about five percentage points in the last decade.
To address ownership inequality, the state of Washington has introduced an innovative home-assistance fund for potential buyers who have been historically marginalized and restricted from ownership. It’s called the Covenant Homeownership Program and it aims to help people who faced discrimination to now receive financial assistance with their closing costs or down payment – generally seen as the biggest obstacles to getting a home.
We know from history that homeownership is the best form of asset-building in our country. The average net worth of a homeowner in the U.S. is $255,000, compared with a renter’s average worth of about $6,300, according to 2019 data from the Federal Reserve.
Since 1950, minority households – including Black, Indigenous and People of Color (BIPOC) – in King County alone lost $12B-$34B because of racially discriminating housing practices, according to a report commissioned by county leadership and issued in July. With a new law enacted in the spring of 2023, the state is moving to make a right out of a huge wrong for the BIPOC community.
Many maps, deeds and contracts are recorded in the county registry and they include property transactions. Beginning Jan. 1, 2024, each action to record those real estate-related documents will include a $100 processing fee that will supplement the new homeownership program.
As of this writing, the framework on who qualifies is still being shaped. Funds will generally be made available to first-time home buyers who 1) were Washington residents before the 1968 Fair Housing Act was enacted and 2) can show they were prevented from homeownership based on covenants against a property (usually in a subdivision or within an association-based community), or 3) are the descendants of those who would have qualified under the first two requirements.
Many residential titles excluded classes of people based on color, creed, religion or gender. Neighborhood associations organized petition drives and convinced white homeowners to add racial-restriction clauses to their properties in many parts of the county, including the Seattle neighborhoods of Capitol Hill, Madison Park, Queen Anne and Magnolia.
These so-called race-based covenants were impermissible after the Fair Housing Act became law, yet many properties continued to carry those unlawful restrictions on the property title – even to this day.
Why should the descendants of those family members who lost out on homeownership qualify for the program? To build generational wealth that could not have otherwise been provided over the past decades. That wealth is potentially available to future members of those qualified families – to launch a new business, enjoy higher education, or help members buy another house.
In other words, to fulfill the American dream.
Assistance with the down payment or closing costs today must be repaid when the home is sold years down the road. It is not a gift from the state.
First-time home buyers are not simply first-ever purchasers. It could be a person who has not owned a home in the last three years. If they didn’t own a home with a partner, they may qualify. Other people may take advantage of this program and those details are still being designed before the program takes effect in 2024.
In truth, bias – even if subtle – is still affecting Americans today and the government – our local government – is taking action to even out the playing field. Many believe this program will be a huge step forward in providing homeownership to more people who experienced the legacy of being left behind.
“Creating a new homeownership account for descendants of those who were denied housing opportunities is simple,” said Washington Realtors® President Alisha Harrison. “As a solution, its effects will be profound.”
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The King County Recorder’s Office provides more information about restrictive covenants and making modifications to a property title and deed. Recording a modification document will not delete the historic record, but it provides notice in the land title records that the racially restrictive covenant is void and unenforceable.