In the literature on homeownership and housing finance, one rarely encounters stories about people. It is unusual to find detailed discussions of what an individual thinks about homeownership, how a particular person looks for a home, or what happens when he or she tries to secure financing for the home. The housing finance research literature is dominated by complex analyses of large data sets -- especially U.S. Census and Home Mortgage Disclosure Act data -- and by large national surveys.

Although they provide important, policy-relevant information, studies based on population estimates and statistical correlations often have difficulty penetrating issues of causation and agency, such as whether disparities in rates of loan denial across racial and ethnic groups are the result of discrimination or of other factors. In reviewing the literature on lending discrimination, Ronald Wienk identified the gap in conventional literature:

Analysis of racial differences in homeownership rates and in where mortgages are made and of whether lender disposition of loan applications differs according to race of the applicant(s) will not tell us all we need to know about discrimination in urban housing credit markets. When viewed as a chain of events, the financing of a home purchase begins at least as early as the decision to buy and ends no earlier than when a financing decision is made. Analyzing the outcomes of this process is a poor substitute for analyzing the process itself and the behavior of all agents in the process (Wienk, 1992).

One way of looking beyond the outcomes to the processes and the behavior of agents is through the use of ethnographic methods.

The four articles in this issue of Cityscape are perhaps the first studies to use ethnographic methods explicitly to explore and document homeownership and home financing processes in specific minority and immigrant communities. The studies, sponsored by the U.S. Department of Housing and Urban Development (HUD), evolved from a research collaboration between HUD's Office of Policy Development and Research and Fannie Mae's Office of Housing Research. For many years, both HUD and Fannie Mae have had an interest in homeownership within minority and immigrant communities. It is hoped that an ethnographic study will contribute to the body of knowledge on this subject by focusing on cultural context and the social forces that constrain or facilitate the purchase of a home.

An Ethnographic Account

In essence, an ethnography is an account of the way of life of a people or community. When Margaret Mead studied adolescence among the Samoan people during the 1920s, she was practicing ethnography. When her teacher, Franz Boas, who is considered the founder of American anthropology, exhaustively documented the lives of the Kwaikiutl Indians in the Pacific Northwest, recording everything from cooking recipes to religious rituals, he was engaging in ethnography. As an art and a science, ethnography developed as European and American intellectuals and decisionmakers came into contact with -- and felt a need to understand -- the peoples of Africa and Asia and the indigenous inhabitants of the Americas.

During the past 25 years, an interesting transmutation of ethnography has occurred. The developed world has become more complex and less homogeneous and is less likely to be taken for granted by academics and policymakers. The textually rich, holistic studies that ethnographers produce have been found to be useful in studying the problems of North American and Western European societies and institutions. Ethnography has come home. Today, a graduate student in anthropology is more likely to study intravenous drug users in Chicago or critical care nurses in Atlanta than the Yanomami in the Brazilian Amazon or the Tikopians in the South Seas.

Although ethnographic studies incorporate many styles and approaches, the characteristics that make them most useful for studying a subject such as homeownership and home financing are that they are descriptive, subjective, analytical, comparative, and emergent. Ethnographic studies are descriptive in the sense that they include discussions of the way things happen: Who is doing what to whom, and why. The two primary means of data collection are ethnographic interviews, which are more like sustained conversations than survey questionnaires, and participant observation: informal interaction with community members and observation of events as they naturally occur. The studies are subjective in that they pay attention to the perceptions, interpretations, and world views of the participants. Ethnographic accounts describe not only what occurs but also the multiple levels of meaningful distinctions by which individuals and groups make sense of, and purposefully act in, the world.

Ethnographic studies are analytical in the sense that they are more than mere description. They are not simply an account of what happened, such as might be picked up by a video camera or a tape recorder. The observations, interviews, and documents are raw data in the way that forms and responses are raw data for the survey statistician. It is the ethnographer's analytic responsibility to condense and order these data. The analytic work can include the identification of nonobvious patterns, associations, and themes, as well as the construction of typologies, processual models, or explanatory frameworks.

Ethnographic studies are comparative in two ways. By studying similar phenomena in various contexts, it is possible to test the strength of associations and patterns. Moreover, ethnographic studies are comparative because they take place within a research tradition, and the findings from each new study are compared with the results of previous research. Finally, ethnographic program studies are emergent in the sense of going beyond what was known or assumed at the beginning of the study. Because the studies can shift focus as the play of relevant elements becomes clear, they can identify themes and processes initially unrecognized.

Ethnography and Housing Research

In a general sense, ethnographers have always studied housing issues. All human societies have had some form of housing, to provide shelter from the physical elements and to demarcate private space from communal or public space. Insofar as early ethnographers studied small communities comprehensively, they paid attention to the way people built and used structures. Perhaps the earliest work to focus on housing was Lewis Henry Morgan's 1881 monograph, Houses and House Life of the American Aborigines (Morgan, 1965). During the 115 years since Morgan's monograph was first published, many ethnographers have explored the reciprocal relationship between culture and house form: the ways in which values and attitudes influence housing choice and the ways that specific structures encourage or constrain social behaviors. Housing, Culture and Design: A Comparative Perspective (Lowe and Chambers, eds., 1989) highlights many recent approaches employed by anthropologists, sociologists, architects, and planners to help them understand and account for the cultural dimensions of housing design.

Another focus of research, inspired by a series of ethnographic studies of American communities, has been the meaning of housing for personal identity. Classic studies by Robert and Helen Lynd (1929), Herbert Gans (1962), and John R. Seeley et al. (1956), as well as more recent studies, have documented the way that Americans, by learning and appropriating the cultural meanings attached to housing, define their place in the social order and use the cultural meanings to display and communicate a desired identity to themselves and others (Hummon, 1989).

Although there is a long history of general ethnographic research related to housing issues, until the present there has not been even a small ethnographic effort oriented specifically to the processes of buying and financing a home. Little ethnographic attention has been paid to these activities, whether they occur in mainstream American communities or in immigrant and minority communities. The lapse is both shocking and understandable. It is shocking because home purchase and finance play pivotal roles in the lives of individuals and in the national economy. At the same time, the lack of ethnographic research is understandable because, until recently, few applied ethnographers specialized in American society, and there was little demand for ethnographic housing research. Ethnographers were not consulted because funders of housing research did not understand that ethnographic research might complement their quantitative research programs.

The Ethnographic Study of Credit Cultures and Housing Financing

The study that eventually became known as the Ethnographic Study of Credit Cultures and Housing Financing began in February 1995 with the signing of a research contract between HUD and ICF Kaiser International and my designation as ethnographic supervisor. My primary qualification was expertise in directing policy-related ethnographic research. I was just then completing a multisite ethnographic evaluation for the Corporation for National Service, and several years earlier I had directed a multisite ethnographic study for the National Institute on Drug Abuse (published as Crack Pipe as Pimp: An Ethnographic Investigation of Sex-for-Crack Exchanges in 1993).

The initial tasks of the housing study were to develop a detailed research design and to recruit individuals to conduct focused ethnographic fieldwork. The primary criteria for field teams were competence in ethnographic methods, experience in access to one or more immigrant or minority communities, experience in housing research, and the ability to begin work on the study almost immediately.

The study began without a commitment to specific research sites. Rather, the approach was to choose from among the most competent candidates those who, collectively, would bring to the study their ability to conduct research in various types of minority and immigrant communities. The four teams that were selected had a wide range of ethnographic and housing research experience:

Rural South Carolina

Kate Porter Young, an anthropologist and fiction writer, was asked to document the experiences of African-Americans and whites in rural South Carolina. During the past 20 years, Young has researched and written extensively on the traditional crafts, social life, and evolving land-tenure patterns of African-American communities in rural coastal South Carolina.

Montgomery County, Maryland

Susan A. Cheney and Charles Cheney were selected to study Hispanic and Indian immigrants in Montgomery County. Susan Cheney has had more than 20 years of experience as a real estate agent, mortgage loan officer, and housing consultant to government agencies and nonprofit organizations. Since 1967, anthropologist Charles Cheney has conducted ethnographic studies in Mexico and the United States that focus primarily on Hispanic community organization, cultural change, and immigration and adaptation.

Northern Queens, New York

Stephen J. Johnston, Jr., and Morsina Katimin were chosen to study immigrants from Korea and the Dominican Republic in northern Queens. Johnston, a licensed architect, is an assistant professor of urban planning at Hunter College in New York City. For several years he and others in his department have studied racial bias in mortgage lending. Katimin, an urban planner with international experience, serves as a project manager at Neighborhood Housing Services of New York City, Inc. (NHS). While at NHS, she has studied a range of social and housing services, including homeownership counseling. William J. Milczarski, also an assistant professor at Hunter College, provided analyses of census and mortgage lending data and assisted in the writing of the ethnographic report.

Syracuse, New York

Stephen Cogswell and Susan Hamilton were assigned to study African-Americans and Hispanics in Syracuse. Both were staff members of Syracuse United Neighbors, a neighborhood organization that provides housing counseling and conducts advocacy research on local housing and community reinvestment issues. Cogswell brought to the study an in-depth understanding of banking and lending procedures while Hamilton, an anthropologist, provided a comparative perspective based on research conducted in Bolivia, Mexico, Argentina, and the United States.

Study Methods

In March 1995 the ethnographic teams came together for a 2-day meeting, during which they agreed on an analytic framework and a set of questions that would guide their research efforts. Beginning in April 1995, each team spent approximately 45 days conducting fieldwork and about 60 additional days setting up their projects, analyzing the data, and writing reports. The research teams reconvened in May for a 1-day, mid-study conference, and again in August to review findings and comment on each draft report. Fieldwork was completed in the fall of 1995 and the report in the spring of 1996.

The teams agreed that the studies would explore homeownership and financing in terms of a general process that encompassed distinct phases, discussed below. During their fieldwork, team members conducted 25 to 50 ethnographic interviews, primarily with current homeowners but also with other members of the community, including potential homeowners. These wide-ranging interviews, which lasted from 20 minutes to 2 hours, covered the interviewee's lifetime experience as a renter and an owner, recent efforts to purchase housing, and future housing desires. The interviews usually resembled guided conversations. Although the researchers eventually covered each area in which the community member might have something to contribute, the tone was relaxed, and the respondents had wide latitude to reframe questions, digress to related topics, and tell their stories completely.

The team members' prior experience in the communities they studied enabled them to develop rapport with community members quickly and to place responses in a relevant social or cultural context when appropriate. The researchers were active participants in the conversations, frequently asking for more information or clarifying their understanding of what had been said. In many cases community members were interviewed several times -- for example, when later research opened up new areas of interest. Sometimes the researchers taped the interviews but often, due to the circumstances, they relied on field notes that were later expanded and clarified.

In addition to the interviews, team members interacted with community members across a wide range of activities. In many cases, they were studying the homebuying experiences of community members they had known for many years. They were invited to dinner, walked the neighborhood together, attended church, and participated in community meetings. Such unstructured interactions, which are very much within the ethnographic research tradition, often provided information that clarified (or sometimes complicated) understandings developed during the interviews. The teams also reviewed documentary sources, such as census materials and local planning studies, and interviewed other individuals with knowledge of the local residential real estate market. These included real estate agents, loan and bank officers, municipal authorities, and representatives of housing advocacy groups.

In an ethnographic project, data analysis overlaps and informs the data collection. As the research teams reviewed their notes from interviews, observations, and documentary sources, they looked for common themes and points of agreement. The researchers developed confidence in their findings when various sources and methods led to the same conclusion; for example, when homeowners, renters, Realtors, and loan statistics all suggested that a particular immigrant group overwhelmingly prefers single-family residences. Disagreement among sources and methods suggests further investigation is needed. Perhaps individuals differ because of differing life experiences or positions in the social structure (for example, wage earners versus entrepreneurs); or perhaps the loan statistics do not agree with the homeowners' experiences, because various base years or target area definitions were used. In the course of ethnographic fieldwork and analysis, a multitude of limited-range hypotheses are set forth and then are supported or negated by the data.

The Home Purchasing Process

The basic question the ethnographic study teams explored was, "Within this community, how do people become homeowners?" As the accompanying articles delineate, there are many routes to homeownership. Some purchasers follow the standard middle-class method of homebuying: A family saves for a downpayment, views houses with real estate agents, contracts to buy a house, and finances the purchase with a conventional mortgage. In the studied communities, however, the experiences of many families are far from standard. Their endeavors to purchase homes often employ mechanisms rarely discussed in the housing literature.

In their efforts to identify the procedures that underlie homeownership, whether standard or not, the researchers visualized the process as having four phases:

• Presearch phase, during which individuals develop or activate the desire to build or purchase a home.
• Search phase, during which individuals explore available possibilities for acquiring a home and meet with real estate agents, sellers, and other parties.
• Purchase-finance phase, during which individuals purchase or build homes, usually utilizing a conventional mortgage or alternative financing.
• Postpurchase phase, during which individuals remain homeowners through the repayment of the financial obligations incurred in the purchase and through maintaining the property.

These four phases of homeownership provided the framework for discussion of the homebuying experiences of minority and immigrant community members.

Study Findings

The ethnographic studies described in this volume highlight the interaction of cultural, social, structural, and economic influences by contrasting the homeownership experiences of several ethnic groups in differing housing markets. Team members were able to document key elements in the homeownership process, identify barriers to homebuying, and suggest means by which homeownership opportunities might be increased.

The ethnographies underscore the need for continual verification that the experiences of ethnic or geographical communities that are lumped together for the purposes of large-scale studies -- or public policy -- are, in fact, similar. Statistically, it is possible to average the experience of African-Americans in Mt. Pleasant, South Carolina, and African-Americans in Syracuse, New York, and produce an overall homeownership rate of 62.5 percent. Such a beguilingly exact number, however, masks differences that are critically important to good policy formulation; for example, the increase in low-cost mobile homes in a rural community with virtually 100-percent owner-occupied housing, or the successful efforts of community groups and banks to raise the African-American homeownership rate in an urban core area to 25 percent. Similarly, while the Dominicans and Koreans in northern Queens and the Hispanics and Indians in Montgomery County, Maryland, are all immigrants and share some problems related to cultural adaptation, the ethnographic studies document that each group possesses distinctly different resources and faces its own challenges on the road to homeownership.

A detailed synthesis of the findings from the four ethnographic studies that compares the experiences of each community at every step in the homeownership process was recently published in Housing Policy Debate (Ratner, 1996). The remainder of this introductory article summarizes four types of shortfalls or deficits -- identified in the synthesis and detailed in the following articles -- that prevent many minority and immigrant Americans from becoming homeowners.

Lack of Appropriate, Affordable Housing

For many minority and immigrant families, the desire for homeownership is frustrated by the lack of affordable housing. In localities such as northern Queens and Montgomery County, many low- and moderate-income households with steady incomes and good credit histories simply cannot afford to purchase homes. No leniency in financing criteria or downpayment guidelines can compensate for housing prices that are far beyond a household's means. In a community such as Syracuse, however, where housing is inexpensive, numerous minority residents of modest means -- many of whom had spent decades of adult life in rental apartments or public housing -- have successfully become homeowners.

Rural coastal South Carolina, particularly the African-American community of Mt. Pleasant, provides a very different, but equally instructive, example. The area's desirability for retirees and Charleston professionals has driven up land prices and set the standard for the type of housing that is built. Low- and moderate-income residents cannot afford newly built homes, and new building codes and zoning regulations do not allow them to build their own homes gradually over time as they have done in the past. One response is the increased use of inexpensive mobile homes in Mt. Pleasant and throughout rural South Carolina.

The ethnographic studies suggest several innovative strategies to make owner-occupied housing more available to low- and moderate-income families. While low-income families are, by definition, limited in their financial resources, their households often have other resources, such as family support, building skills, and energy. It is possible to provide more options for households by encouraging strategies that allow sweat equity to play a larger role, such as streamlined procedures, reduced fees, and technical assistance for low-income owner-builders.

Another tactic, which can be employed in highly urban areas such as northern Queens, is to make condominiums and cooperative apartments more attractive to minorities and immigrants. The acceptability of owner-occupied multifamily housing can be increased through targeted marketing and outreach. However, there is also a need to restructure long-term financing mechanisms and governmental subsidy programs so that low- and moderate-income families can take advantage of the same subsidies, low downpayment options, and low interest rates, whether they are buying a single-family home, a condominium, or a cooperative apartment.

Limitations of Existing Financing Tools

Favorable economic conditions and a number of new financial tools made it easier for more low- and moderate-income minority and immigrant households to obtain home financing in 1995 than in earlier years. Downpayment requirements were generally low, credit criteria were less stringent, and many mortgage lenders were more inclusive in terms of cultural variations. Relatively low mortgage rates also made it possible for creditworthy households to finance entry-level housing with less income than had previously been required. Nevertheless, some home-financing shortfalls remained.

One source of difficulty is the standardization implicit in national underwriting criteria for secondary mortgages. The ethnographies suggest that bankers and loan officers often have a well-developed understanding of their local economic and cultural contexts. In many minority and immigrant communities, a typical loan looks very different from the industry-wide standard loan. Housing capital would be available to a wider range of creditworthy borrowers in these communities if their primary lending institutions could develop alternative criteria, establish a track record of successful loans, and then sell the alternative loans through the secondary market -- perhaps with guarantees or after several years of seasoning.

A different type of financing shortfall exists because both secondary market programs designed for low- and moderate-income households and bank-sponsored affordable home programs essentially are available only to households wishing to buy a home that can be occupied immediately. While the studied communities exhibit a demand for programs to aid low-income people planning to build their own homes or purchase homes in need of rehabilitation, there is virtually no financing of this type available. A related concern, documented in the Syracuse and South Carolina ethnographies, is that of skilled and experienced residents of the studied communities who would like to build or remodel homes and sell them at affordable prices. They, too, have been unable to obtain bank financing for their projects. Consequently, their work has been restricted to small projects they can self-finance. The larger projects they wish to undertake, which have the potential to increase significantly the stock of appropriate, affordable housing in the community, are left undone.

Lack of Home Purchasing Knowledge, Credit Knowledge, and Credit Judgment

Across the sites that were studied, many potential and current homeowners had incomplete knowledge of the homebuying process. Some did not fully understand the way financing works, the role of real estate agents, or the allocation of mortgage points and commissions. Others did not understand the way credit agencies, lenders, and underwriters evaluate creditworthiness. Misperceptions, such as the belief that good credit was determined only by whether an individual eventually paid his debts, rather than by when they were paid, were commonplace. Some community members also lacked what might be called good credit judgment. Across the sites, ethnographers encountered people carrying huge consumer-credit debt loads. Though they worked hard and earned incomes that could have enabled them to buy houses, their debt loads prevented them from doing so.

Within the studied communities, many individuals and organizations worked to increase the homebuying knowledge and credit understanding of potential minority and immigrant homeowners. Associations of lenders held housing fairs; banks sponsored mortgage-lending seminars; real estate agents made presentations to community groups; nonprofit agencies offered homebuying classes and clubs; and a variety of individual and institutional cultural brokers, such as churches, housing agencies, and cultural organizations, encouraged homeownership and provided education and assistance. In Syracuse, for example, homebuying programs run by nonprofit agencies in collaboration with local banks worked closely with low- and moderate-income households over many months or years, helping them find ways to clean up their credit histories and accumulate enough funds to buy a home.

Cultural Gaps, Biases, and Misunderstandings

The fourth shortfall concerns ways that the homeownership process is inhibited by cultural gaps, biases, and misunderstandings that arise when immigrant and minority households approach mainstream institutions associated with homeownership. One of the distinct patterns to emerge from the ethnographic research reveals that, although both immigrant and minority group members feel distanced from mainstream Realtors, banks, and mortgage lenders, they experience that distance in different ways.

All of the immigrants suffered a cultural gap in relation to mainstream financial institutions. Except for some Indian immigrants who spoke English at home, there was a language gap between the immigrants' native language and the usual operating language of the institutions. There were also cultural differences in terms of the way debts were to be repaid or whether assets were to be publicly declared. Immigrant families were rarely surprised or bitter, however, about the linguistic and cultural differences. When they left their homelands, they had expected that things would be different in the United States and that they would need to adapt to the ways of their adopted country.

While all immigrants share the common experience of being culturally different from other Americans, researchers discovered great variations in housing and homeownership experiences within and across the immigrant groups. Not surprisingly, immigrants with professional and business careers had the least difficulty becoming homeowners. They had financial resources (often including a parental contribution from abroad), financial acumen and, usually, fluent English language skills. Though many had encountered difficulties when buying homes, rarely were those difficulties interpreted as arising out of discrimination.

The less well-educated and less entrepreneurial immigrants had more difficulty becoming homeowners. Many worked in entry-level or unskilled positions for wages that were far below those needed to buy a home, especially in the high-priced Montgomery County and northern Queens markets. But many homebuyers with middle-range occupations, such as roofers and cab drivers, and many households with three or more wage earners could purchase homes at the low end of the Montgomery County and northern Queens housing markets and, at a much lower cost, in Syracuse. Some difficulties were encountered that might be considered as arising from cultural bias but, in general, discrimination was less of an issue than difficulties that arose from cultural misconceptions or from a lack of financial knowledge. Many potential misunderstandings were avoided with the help of real estate agents, loan officers, and mortgage brokers who shared an ethnic identity with consumers and eased immigrants through the home-purchasing process.

The experiences and perspectives of the African-American communities in our studies were very different from those of the immigrants. African-Americans in both Syracuse and South Carolina reported a pervasive feeling that in various -- often subtle -- ways, discrimination continues to hinder their home-purchasing efforts. In Syracuse, the presence of African-American real estate agents, loan officers, and bankers, as well as community lending programs that specifically reach out to the African-American community, has reduced (but not eliminated) the pervasive sense of discrimination. Such efforts are just beginning in rural South Carolina.

The South Carolina ethnography provides another window on the issue of discrimination. Not only rural African-Americans but also low- and moderate-income rural whites felt a pervasive and subtle discrimination in their dealings with mainstream financial institutions. Many rural whites saw the banks as institutions that primarily promoted the interests of the urban, white middle and upper classes, not those of rural and blue-collar workers. Like the African-Americans in the study, many rural whites believed that if they applied for a loan they would receive unfair treatment, condescension and, ultimately, rejection. In terms of making homeownership opportunities more readily available to immigrants, minorities, and rural whites, the message to mainstream financial institutions from the people who described their experiences to the ethnographers is unequivocal. Regardless of cultural tradition or economic circumstances, individuals prefer institutions that treat them with understanding and respect.

Unfortunately, the current trend toward standardized and automated loan origination may inadvertently increase the alienation felt by many minority, immigrant, and poor white borrowers. Because their creditworthiness (and character) may not be fully portrayed in the standardized forms and scoring criteria, their applications may not be accurately evaluated. When loans are unfairly denied, not only the applicants but all of their acquaintances may be discouraged from approaching mainstream lenders. To attract creditworthy borrowers with these backgrounds at the same time they are working to improve loan origination efficiency, mainstream lenders must demonstrate to the affected communities that they are interested in obtaining their business and will give their loan applications a fair evaluation.

Author

Mitchell S. Ratner, Ph.D., is an applied anthropologist with more than 20 years of domestic and international social science research experience. In 1992 he founded TIGER Research, a Takoma Park, Maryland, consulting firm specializing in providing policy-oriented research and evaluation services to governmental agencies, nonprofit organizations, and businesses.

The author would like to thank Eric Oetjen and Ann-Mari Gemmill for their perceptive comments and suggestions on several earlier drafts of this introduction.

References

Gans, Herbert. 1962. The Urban Villagers: Group and Class in the Life of Italian-Americans. New York: The Free Press.

Hummon, David M. 1989. "House, Home, and Identity in Contemporary American Culture." In Housing, Culture, and Design: A Comparative Perspective, Setha Low and Erve Chambers, eds. Philadelphia: University of Pennsylvania Press.

Low, Setha, and Erve Chambers, eds. 1989. Housing, Culture, and Design: A Comparative Perspective. Philadelphia: University of Pennsylvania Press.

Lynd, Robert, and Helen Lynd. 1929. Middleton: A Study in American Culture. New York: Harcourt Brace and World.

Morgan, Lewis Henry. 1965 (original 1881). Houses and House Life of the American Aborigines. Chicago: University of Chicago Press.

Ratner, Mitchell, ed. 1993. Crack Pipe as Pimp: An Ethnographic Investigation of Sex-for-Crack Exchanges. New York: Lexington Books.

_____. 1996. "Many Routes to Homeownership: A Four-Site, Ethnographic Study of Minority and Immigrant Experiences." Housing Policy Debate 7(1):103-145.

Seeley, John R., R. Alexander Sims, and Elisabeth W. Loosley. 1956. Crestwood Heights: A Study of the Culture of Suburban Life. Toronto: University of Toronto Press.

Wienk, Ronald E. 1992. "Discrimination in Urban Credit Markets: What We Don't Know and Why We Don't Know It." Housing Policy Debate 3(2):217-40.