Is the American Dream of Homeownership Out of Reach?
NPR’s SoundSide posed this question to a panel joined by HomeSight’s Executive Director Darryl Smith and all agreed change is long overdue. (… and HomeSight has innovative solutions to unveil in the coming year.)
Last week, HomeSight Executive Director Darryl Smith joined a panel with NPR’s SoundSide to discuss homeownership in Washington. Host Libby Denkman said the unfavorable climate for first-time homebuyers – created in part by 7.5% interest rates and housing home prices jumping 40 percent since the pandemic – left many feeling “shut out” of this traditional path to generational wealth stability.
A $750,000 median price for a starter home in King County puts homeownership out of reach for a lot of people, Smith said, adding that he bought his first Seattle home with his wife over 20 years ago for just $99,000.
Times are tough now for millennials who want to become homeowners, Denkman said, and Smith pointed out that for people of color, this situation is far from new: homeownership was deliberately placed out of reach through legal channels for hundreds of years.
“It’s easy to think this is a new problem and it used to be easier across the board for people to buy homes, but frankly, that isn’t true for everyone,” Smith said. “Redlining and other laws shut out people of color from the advantages of homeownership, explicitly excluding them from ways families build wealth, pay for college, start businesses or deal with a health catastrophe. In many areas, the government played a direct role in creating this ecosystem of housing disparity, and it’s led to a wealth gap that’s only getting wider.”
Because it is a nonprofit Community Development Financial Institution (CDFI) with a mission to help low- and moderate-income families secure mortgages, HomeSight can offer programs such as down payment assistance or reduced down payment requirements. “Unlike commercial lenders, we’re governed by the Department of Financial Institution, but we have that mission, that drive, to navigate the challenges our clients face,” said Smith. “That’s what we do. It’s incredibly important work.”
But out-of-reach housing costs represent only part of the problem, and the panel also discussed the housing shortage.
“First-time homebuyers are seeing fewer and fewer choices in their price range,” Smith said. “There’s this critical gap between what someone can afford and what’s actually out there.”
Smith said that as a developer of affordable housing, HomeSight is bringing an innovative solution to this challenge. Next year, HomeSight hopes to break ground on a co-operative housing development, U-lex @ Othello Square for low- and middle-income families in south Seattle. Situated next to the light rail station at Martin Luther King Jr. Way and South Holly Park Drive, U-lex will offer 68 units affordable to families earning 80 percent or less of the area median income at the time of purchase.
“If you look at housing as rungs on a ladder, and you see people that cannot reach that lowest rung, we’ve got to put rungs within reach,” said Smith. “For many low- and middle-income people in Washington, even a so-called ‘starter house’ is too big a leap to get into the real estate market. With a co-op like U-lex, people can start building equity at a much lower price point than you’d find in this housing market. U-lex is creating the first few rungs on the ladder, so people can start the climb to the true financial stability homeowning allows.”
Smith said HomeSight has also joined more than 80 partners in the regional housing community to form the Black Home Initiative, which has a goal of creating 1,500 new black homeowners in the next five years. “This is a big problem, and we need everyone at the table to find solutions and create strategies to solve this. Housing isn’t just one issue, it’s several. We need to make changes in the way we do appraisals, zoning, land use, construction financing and lending.”
BHI’s goal is to “make sure we can offer opportunity to as many families as possible, particularly to those who have been denied in the past,” said Smith. “This approach lifts everybody up, not just the people we help directly, but whole neighborhoods. Looking at this holistically is the key to creating a healthy ecosystem. We all do better when we all do better.”