The racial homeownership gap in Pittsburgh is widening. What can be done to fix it?
DeOndra Parker, a single mother who lived on the North Side, hadn’t originally planned to move from her two-bedroom apartment to a new house last year.
But with a 2-year-old and another child on the way, Parker said she was concerned about the safety of living in a third-floor apartment. When she started looking for other rentals nearby, she realized the costs were “just insane”.
She decided that buying a house made more sense than renting another apartment.
Parker knew the road to homeownership was going to be tough. But until she started her search, she didn’t realize how many hurdles she would have to overcome, from rising prices to a lack of options nearby, to credit requirements that eliminate potential buyers.
In Pittsburgh, these challenges have contributed to a growing racial disparity in homeownership, according to a recent report by the Pittsburgh Community Reinvestment Group. [PCRG].
While housing disparities have a deep history tied to overt discrimination such as redlining, the report notes that modern barriers continue to limit the ability of people of color to own their own homes.
“It doesn’t look like we’ve changed the meter needle,” said PCRG executive director Ernie Hogan. “We think it’s a much more complicated question that banks aren’t lending to black people.”
As a possible solution, the PCRG and other community organizations are pushing for a statewide community reinvestment law. [CRA] legislation to increase racial equity in lending to homebuyers.
A published report last summer by the Lower Marshall-Shadeland Development Initiative [LMSDI] and Parents Against Violence found that one neighborhood – Shadyside – received more bank loans ($1.054 billion) than 17 minority neighborhoods combined ($807 million) between 2007 and 2019.
“If we can identify the problem, what is the solution? What is the opportunity? said Dan Holland, research director of LMSDI. “By working in this area for the past 25 years, unless you hire financial institutions to identify opportunities in the neighborhood, you won’t make any progress.”
What barriers to housing exist for Pittsburgh residents of color?
Financial institutions use a borrower’s credit score history to gauge their ability to manage financial obligations and pay bills on time. But according to the PCRG report, black applicants are more likely to be turned down because of their credit history than white applicants.
Catapult Greater Pittsburgh is a nonprofit organization that provides economic justice-focused financial advice and services. In addition to technical assistance, they help residents see that home ownership is a possibility.
“In many cases, fear is what keeps people from taking the first step into homeownership,” said general manager Tammy Thompson. “We try to make people as comfortable as possible with the idea of ownership. And it’s scary. It’s the biggest financial transaction most people will ever make.
Before Parker went to Catapult, she went to another community organization to apply for a grant to help with funding. She spent weeks filling out paperwork before submitting her application, she said, only to hear back that she had been denied because of her credit history.
But his credit rating wasn’t the biggest obstacle.
She had hoped to stay close to her family and friends in the North Side, especially because she would have two young children. “There was nothing there for me that was ready to move in and priced just realistically,” she said.
She eventually found a home in the Penn Hills area.
Reflecting on his journey to becoming an owner, Parker said: “It helps me show that I’m growing inside of me…especially when you come from certain backgrounds and you never expect these things to happen to you. For me, it’s just a big accomplishment to be able to buy my own house and be financially healthy and be able to actually afford to live here and really manage.
Thompson said another key challenge often faced by black homeowners is saving enough money for a down payment and closing costs.
“I’m sure that’s a barrier for everyone…most people at least,” Thompson said. “But for black families, it has been, especially in this area and this city, where wages are so low compared to other parts of the country. People are barely able to meet their usual living expenses.
In August, Catapult launched a new program called Next Steps Fund to help families through this stage of the home buying process. Since then, Thompson said he has helped 12 people through the program and five people are in the works.
Parker participated in property development opportunities for Catapult residents [DOOR] program, a pre-purchase program to meet the specific needs of potential buyers through monthly workshops and personalized advice.
How do community groups address housing disparities?
On his way to work at PCRG in the Hill District, John Boyle said it was hard not to notice the vacant land and uneven land investment.
Boyle led the analysis of over a decade of housing data to produce the PCRG report.
“What might have been affordable ten years ago may still have been unaffordable for Black and [low-to-moderate-income] communities,” Boyle said. “Now what we’re seeing is an even bigger gap in that affordability and how that’s driving homeownership rates down in the city for everyone, but still especially for Black and LMI communities. .”
The PCRG report stresses that short-term solutions such as increasing down payment and closing cost assistance programs are not enough to remedy centuries of racial discrimination and disinvestment.
The PCRG is pushing for the statewide CRA to target banks, credit unions and mortgage companies “with a greater focus on racial equity.” The National Community Reinvestment Act was passed in 1977 and requires federal banking regulators to promote fairness in lending.
Some critics argue that the CRA provides too little benefit at a high cost. A 2019 Analysis of the Cato Libertarian Institute criticizes the federal law for having “ill-defined” goals and for incentivizing banks to make riskier loans to serve low-income borrowers.
Only a few states in the country have established a statewide CRA, including Connecticut and New York. Last year, New York lawmakers voted to require nonbank lenders like mortgage companies to follow the state CRA. Some mortgage industry critics argue that the expansion creates new regulatory burdens and that non-bank lenders are already investing funds locally from global markets.
Boyle said the inclusion of mortgage companies in Pennsylvania’s CRA legislation is important because they have become an increasingly common way to borrow for home loans in recent years.
Currently, the PCRG is working with banks to reduce barriers and less penalize borrowers with student or medical loans.
“If you have student loan debt that’s reducing the amount you can borrow, but house prices are steadily rising, rising, rising, rising, rising, that continues to fill that gap, that window of opportunity, for people who want to buy from low-to-moderate income demographics,” said Thompson of Catapult.
The National Coalition for Community Reinvestment [NCRC] released several reports highlighting the lasting effects of discriminatory redlining and housing practices, including how the COVID-19 pandemic has deepened racial disparities in homeownership.
“There are statistically significant associations between a larger red line and pre-existing conditions for an increased risk of morbidity in COVID-19 patients such as asthma, COPD, diabetes, hypertension, hypercholesterolemia, diseases kidney disease, obesity and stroke,” according to the NCRC report.
In early March, the NRC published an article on ARC reforms, highlighting the importance of using stronger data to assess banks’ equity efforts and to identify community needs.
“Lenders have a responsibility,” Thompson said, noting that “regular working-class workers” did not benefit from policies such as the federal bailout of banks during the 2008 financial crisis, which had its roots in the predatory lending.
“Something That’s Yours”
This month marks Shanel Woodruff’s eighth birthday in housekeeping at the University of Pittsburgh. On March 15, Woodruff closed his first home with help from Catapult.
When the pandemic hit, Woodruff said she moved into a basement apartment at Friendship. She lived there for two years but was unhappy with the pests and the state of the walls in the apartment. As the lease of her apartment was ending in February, she wanted to move.
But like Parker, finding an affordable rental was a nightmare. “It’s a depressing thing looking for apartments,” Woodruff said.
So Woodruff began considering buying a house.
Prior to the search, she had no credit cards or credit history. She said Catapult helped her build a credit history and apply for grants to buy a house.
Now, she said her current monthly mortgage payment is $743, which is only a dollar more than what she paid in monthly rent. Without help, she might not have been able to find housing that met her needs.
“I know this felt like a long time, I had probably been looking for a place for over a year,” Woodruff said. “But it takes people years to find a place because it’s very difficult. But in the end, it’s totally worth it, just to have something that belongs to you.
Katelyn Vue is an editorial intern at PublicSource. She can be reached at [email protected].
This story has been verified by Abigail Nemec-Merwede.
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