Banking and housing professionals from all over the country gathered in the offices of Barnes & Thornburg LLP inside Buckhead’s Tower Place 100 Wednesday afternoon to discuss housing affordability and financial inclusion across the Atlanta metro area.
The event, consisting of three separate panels, described initiatives local banks, nonprofits and other institutions can take to help diminish the racial gaps permeating the city’s homeownership rates.
While homeownership served as the point of focus for the discussion, the panels also covered the need for greater economic mobility among Atlanta’s minority populations, noting discrepancies in employment opportunities and social bias as contributing causes to financial setback.
Barry Wides, the deputy comptroller for community affairs inside the Office of the Comptroller of the Currency in Washington, D.C., said matters of homeownership inequality and financial inclusion are connected.
Wides leads an affordable homeownership group in Washington that focuses specifically on shrinking the homeownership gap separating minority groups from their white counterparts. Through a series of initiatives, Wides and the OCC work to deliver more financial opportunities to low-income residents.
The Office of the Comptroller of the Currency also financially supports minority-owned banks and depository institutions in order to better benefit the minority markets they serve.
One of the organization’s largest initiatives is Project REACh, a multifaceted approach to bettering financial inclusion in disadvantaged communities. Wides said that Project REACh prepares lower-income individuals and families for homeownership and other financial milestones by increasing their access to credit and capital, two elements that serve as limitations to most large investments. The initiative brings together leaders in banking and technology, as well as government agencies and civil rights organizations.
“If you don’t have credit, and you can’t get credit because you haven’t had credit, it’s a bit of a circular process, and it’s challenging for many people, particularly recent immigrants, to break into now,” Wides said. “So, much of the work [that] streams into our Project REACh initiative is also focused on encouraging banks to develop products and tools that help customers.”
Minority potential homebuyers face many obstacles when attempting to increase equity. One of these obstacles, Wides said, is appraisal bias. The appraisal industry is one of the most racially homogenous, and Wides said a solution to minority families being paid what they deserve for the homes they own is to diversify the workforce.
Disproportionately rising housing prices combined with an overall lack of supplies needed to build new homes, have exacerbated the impending housing crisis on both local and national scales.
Dan Magder, managing partner of Center Creek Capital, said the issue plaguing affordable housing is the fact there isn’t enough of it.
Based out of Washington, Center Creek Capital Group works to improve housing affordability in various markets across the country. The organization began establishing a presence in the southeastern United States with its most recent pair of housing funds, using it to purchase dilapidated housing and converting it into rentable three-bedroom, two-bathroom single-family homes. Magder said Center Creek increases housing supply within insufficient markets by making use of land and resources developers left abandoned.
“Our approach is scalable; we do it over and over and over again,” Magder said. “And we’re tapping into a portion of the housing inventory that has been overlooked because it was just kind of hard to do.”
All of Center Creek’s clients begin as renting tenants, but are given the chance to purchase the home they reside in after a given period of time. Tenants can also opt to rent for as long as they want. Magder said Center Creek also prepares their tenants to assume homeownership and financial stability through providing resources they can access in their spare time.
Contrarily, Atlanta Land Trust allows its clients to own their homes from the start, though the land underneath remains under the ownership of the organization. If an owner wishes to sell their house over time, they must comply with the ALT’s request to sell the home to another low-income family, while keeping the listed price at a cost affordable to those from disadvantaged backgrounds.
Amanda Rhein, executive director of Atlanta Land Trust, said the community trust model allows the organization’s housing options to remain affordable year-over-year.
“That process just repeats itself time and time again so that home remains affordable in perpetuity,” Rhein said. “Within the ground sale lease, there’s a resale formula that allows for the homeowner to participate in the equity appreciation of the home, so it does provide a limited opportunity for wealth creation, as well as just the stability of homeownership.”
Another necessary action in the affordable housing development plan is to preserve the affordable housing options already at the public’s disposal. Robert Bachman, senior director of Enterprise Community Partners, said allocating funds to ensure affordable housing remains affordable is crucial to keeping the supply intact.
“We’re still losing more affordable units every year than are being produced,” Bachman said. “So why think, ‘Well, we did much more,’? It’s still not going to make up the difference.”
The Federal Reserve Bank of Atlanta assigned the Atlanta-Sandy Springs metropolitan area a housing affordability index of 67.8 for October of last year, the most recently data point in a graph tracking affordability since 2014.Home Ownership Affordability MonitorBusiness economists and analysts, check out our new interactive home affordability tool.www.atlantafed.org
According to the bank, an index rating of 100 or higher indicates a metro area or city has accessible affordable housing. The Federal Reserve’s index first dipped below 100 in January of last year, coordinating with the national increase of mortgage rates following the record-low percentages the housing market witnessed throughout 2020 and 2021.